ECB to call for harmonised approach to crypto regulation
EU unity could be undermined by time it takes to implement crypto asset regulation
The European Union is one step closer towards regulating the cryptocurrency industry across Europe after representatives from EU member states and the European Parliament concluded a deal to establish a wide range of standards for the volatile sector.
The standards – known as Regulation on Markets in Crypto-assets (MiCA) – aim to provide greater legal clarity by establishing definitions for digital assets, stablecoins and other instruments. Coin offerings will also come under greater oversight, with crypto assets needing to be registered with relevant authorities before they are made available to the public.
Companies that issue stablecoins, or asset-referenced tokens (ARTs), will need to have a registered office in the European Union in order to market their product. In addition to substantial reserve requirements, ARTs may also see their transaction volume capped at around €200m ($209m) a day.
Fears about a patchwork of regulations
However, before MiCA passes into law, concerns are being raised that a regulatory patchwork may develop among EU members states in the meantime. The European Central Bank (ECB) will this week warn eurozone countries against getting ahead of the Markets in Crypto-assets (MiCA) legislation, according to the Financial Times.
One national regulator was quoted as saying: “It’s very challenging. With MiCA 18 months away, are you better to say, ‘until it’s in do what you like, there’s no regulation’ or are you better to try to get a handle on it?”
18 months until end of ‘crypto wild west’
After the deal was struck last week by EU member states, French Finance Minister Bruno Le Maire, who has chaired the intergovernmental talks on MiCA for the past six months, argued that the regulation “will put an end to the crypto wild west” and confirmed “the EU’s role as a standard setter for digital topics”.
One of the most contentious topics for negotiators concerned whether EU agencies or national regulators should supervise crypto companies. Although the ECB is expected to stress the importance of “harmonisation” at a meeting of its supervisory board on Tuesday, the fact that MiCA can only be implemented in 18 months time at the earliest could undermine a united front.
So far this year, there has seen significant volatility in the cryptocurrency markets. Indeed, the total capitalisation of the cryptocurrency market sank from $2.18trn at the start of 2022 to $875bn as of 4 July 2022, according to CoinMarketCap.