The European Union has taken a major step forward in its bid to regulate the crypto assets world after its executive branch issued its most extensive proposals to date for supervising the growing sector.

Tye measures suggested within the EU's digital finance strategy include cryptocurrencies not presently included in general regulation as well as a number of so-called stablecoins.

The aim is to not just reduce volatility in cryptocurrency trading or to provide more regulatory certianty for investors but also to reduce market fragmentation in Europe by ensuring that once a crypto trading company is approved in one EU state, it is free to operate in all other EU states.

"We must proactively embrace digital transformation, while mitigating any potential risks," said Valdis Dombrovskis, executive vice-president of the European Commission. "A digital and innovative single market for finance will benefit Europeans and be key to Europe's economic recovery by delivering better financial products for consumers and opening up new financing channels for businesses."

The Regulation on Markets in Crypto Assets or MiCA bill will provide defintions on what constitutes a crypto asset as well as various token sub categories. It will also lay down rules for digital asset custody and capital requirements as well as the relationship between token issuers and token holders.

The bill also stipulates that providers of any crypto-based encryption services have a physical presence within the EU.

There are also measures to deal specifically with stablecoins following concerns raised by a number of finance ministers within the EU earlier this month.

If the bill is passed it would make the EU one of the most regulated centres for crypto trading and digital assets. However, there is likely to be a lengthy legislative journey ahead. The bill must be debated by both the European Parliament as well the different national governments before it can be passed into law. Meanwhile the Commission has stated that it hopes to see the framework in place by 2024.

The fact that any law must be implemented at a national level may prove to be a sticking point. The Commission has stated its preference for more regulatory harmonisation at an EU-wide level.

"Truly integrated and convergent oversight is needed to ensure a truly level playing field for all market players," said Domborvskis. "This will be particularly relevant in a post-Brexit world, with multiple financial centres in the European Union."

But achieving harmonisation has proved difficult in the past and EU states have recently reduced a 2017 Commission proposal to bolster supervisory powers at an EU level in favour of maintaining power at a national level.