The European Union (EU) has called on the rest of the world to adopt its cryptocurrency regulations. They believe that the whole globe should adopt these regulations so that consumers are safe. This way, the EU suggests that financial stability is ensured. Mairead McGuinness expressed her hope that the EU’s regulations will serve as a model to the world. For your information, Mairead McGuinness is the EU financial services commissioner.
“I hope that our rules could become a model for other countries… We believe had FTX been captured under the EU’s jurisdiction, many of its practices would not have been permissible under MiCA.”
Mairead McGuinness, EU Financial Services Commissioner
On Thursday, the European Parliament is set to approve the Markets in Cryptoassets Regulation (MiCA). This would mark the world’s first major regulatory framework for the crypto industry. EU member states have already shown their support for the regulation. Even the crypto community is happy about the regulation. Yet, the majority believe that this regulatory framework is very strict.
Always insightful to catch up with colleagues and friends during the @IMFNews @WorldBank Spring Meetings in Washington D.C. on topical issues such as sustainable finance, digital finance including crypto and sanctions implementation. pic.twitter.com/WbuUlwIYTu
— Mairead McGuinness (@McGuinnessEU) April 17, 2023
The crypto industry has experienced several crises last year. These include the collapse of the FTX crypto exchange, one of the biggest crypto exchanges in the world. Because of the FTX scandal, regulatory authorities have woken up and are taking action. The scandal has also caused a significant drop in the price of Bitcoin. Until today, however, Bitcoin has recovered quite well and its market capitalization is increasing.
EU Crypto Regulations Will Be Implemented in 2024
MiCA stated that crypto firms must have authorization from the EU to provide services to customers within the regions. Additionally, the firms must comply with measures to counter illicit activity. MiCA mentioned money laundering and terrorism financing in particular. Starting in July 2024, the regulation will be implemented in several phases. This will allow the sector ample time to adjust.
According to MiCA, getting authorization in just one EU country will give the crypto firms the legal right to offer their services and products in all 27 member states. As of right now, major EU cities like Paris are already courting businesses in the crypto industry. This is happening around the world as we write this article. However, now that EU regulations are just around the corner, things might get less messy in the EU crypto sector. Ernest Urtasun, the Green Party lawmaker, declared that implementing these regulations will mean the end of the “Wild West era” for cryptocurrencies.
Tomorrow we will put an end to the Wild West era for the unregulated world of crypto.
TFR will bring strong anti-money laundering rules for cryptoassets.
MICA is a first good step, but there is more to be done, from lending and staking, decentralised finance, NFTs, to the… pic.twitter.com/1cEWVmt8WZ
— Ernest Urtasun (@ernesturtasun) April 19, 2023
The commission is still working on the regulations. Currently, it is focused on whether additional regulations are necessary for decentralized finance (DeFi). Decentralized finance s currently the least safe sector in the crypto industry. While it remains unregulated, people can use it for lending and borrowing cryptocurrencies whenever they feel like it.