EU Crypto Regulations: Unequal Enforcement Raises Industry Concerns
Summary:
Jon Helgi Egilsson, founder of Monerium, raises concerns over inconsistent enforcement of crypto regulations in the EU. A disparity remains between entities operating under the Electronic Money Directive (EMD) and those operating under the soon-to-be-implemented Markets in Crypto-Assets Regulation (MiCA). The European Commission chose MiCA over EMD due to unique risks posed by electronic money tokens and stablecoins. Unequal enforcement of the two has led to concerns in the industry. As the full implementation of MiCA is due in 2024, more clarity on its interaction with existing EU financial laws is required.
The cornerstone crypto laws of the European Union, established in 2023, are scheduled to be implemented this year. However, Jon Helgi Egilsson, founder and chairman of Monerium, a licensed e-money issuer, noted the uneven enforcement of prevailing laws. He outlined that the imminent regulations, known as the Markets in Crypto-Assets Regulation (MiCA), were established on the foundation of the EU's Electronic Money Directive (EMD II) — a set of rules frequently overlooked. Egilsson expressed disappointment about the inconsistent enforcement, emphasizing its impact on e-money businesses. He detailed the conditions faced by e-money institutions, where non-compliance leads to penalties and probable imprisonment. Despite his clear interpretation, he added that the level of scrutiny varies. Egilsson voiced concerns about competitors, both within and outside Europe, who operate without licensure. Adding to the anxieties of e-money issuers, obtaining a license also brings forth additional issues. He described the restrictions and requirements that accompany licensure, culminating in extravagant overheads and expenditures. While organizations like Monerium face tight regulatory inspection, other money forms such as stablecoins operate with less oversight. Disgruntled with the situation, Egilsson expressed astonishment at the regulators' actions. To delve deeper into the unequal law enforcement, Cointelegraph consulted with Natalia Latka from Merkle Science. Latka explained two legal paradigms concerning regulation of electronic money tokens or stablecoins in the EU. The first emphasizes the supremacy of the Electronic Money Directive, viewing MiCA as an extension rather than a novel regulation. The second perceives MiCA as the central legislation for stablecoins or EMTs, considering EMT's unique risks not present in e-money. Following this approach, the European Commission found EMD's provisions inadequate to address such risks and therefore, chose to devise a new compatible regulatory structure. The crux of the concern for insiders like Egilsson lies in the lack of enforcement equality whilst the new system was being conceived and introduced. When asked about whether MiCA would bring about a change, Egilsson expressed a firm belief in its enforcement. Yet, with the complete implementation of MiCA only due later in 2024, there remains much to be determined, and the legal discussion on stablecoins and e-money is far from over. Latka underlines the need for precise guidance from EU authorities and the necessity for clarity on MiCA's interaction with current EU financial regulations to eliminate colliding or overlapping laws.
Published At
5/7/2024 6:44:00 PM
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