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1. Introduction

Financial technology (Fintech) is disrupting finance at a rapid pace, forcing a rethink on legacy financial regulation. In particular, the question of the regulatory treatment of crypto-assets and blockchain and distributed ledger technologies (DLTs) has been a major focus of regulators and market participants since the launch of Bitcoin in 2009, and further still since the crypto bubble of 2018.1 Yet, a more general question is even more important: How should innovation and the use of only partially understood technology be regulated? In Europe, this was for a long time up in the air.

Since the European Commission’s Fintech Action Plan of 2018 signalled a determination to make beneficial use of technical innovation,2 the Commission has taken a broad approach by adopting on 24 September 2020 a new Digital Finance Package.3 That package comprised the new Digital Finance Strategy (DFS 2020)4 combined with a renewed Retail Payments Strategy,5 in an effort to ‘boost Europe’s competitiveness and innovation in the financial sector, paving the way for Europe to become a global standard-setter’.6 The Commission ‘aims to boost responsible innovation in the EU’s financial sector, especially for highly innovative digital start-ups, while mitigating any potential risks related to investor protection, money laundering and cyber-crime’.7

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