FTX's Collapse, Binance's Settlement Highlight Need for EU's MiCA Regulations
Summary:
The 2022 failure of FTX, along with Binance's recent $4.3 billion settlement with US authorities, reinforces the necessity for the European Union’s Markets in Crypto-Assets (MiCA) regulations, says European Commission official, Ivan Keller. The regulations aim to foster innovation while also addressing consumer protection, market stability, financial security, and currency sovereignty risks. The MiCA rules which primarily concern stablecoins are set to take effect in June 2024 with rules for crypto-asset service providers commencing in December 2024.
The 2022 downfall of FTX, coupled with Binance's recent payout of $4.3 billion to US authorities, serves as a powerful testament to the necessity of the European Union’s Markets in Crypto-Assets (MiCA) regulations, according to an official of the European Commission. In a dialogue with Cointelegraph during the MoneyLIVE conference in Amsterdam, Ivan Keller, who functions as a policy officer for the European Commission, spoke out. Coming on the heels of Binance's publicized agreement with the US Department of Justice (DoJ), Keller's speech underscored the significance of MiCA's impending full implementation in 2024.
"Several unfortunate incidents have reemphasized the necessity for stringent regulations. FTX was one of the major situations, and the Binance case followed suit," Keller said. "Our stance is this set of guidelines could alleviate some of the risks and equip regulators with more direct means to monitor these entities and minimize these risks."
He also shared an overview of the progress towards the complete application of MiCA across the entire European Union. The regulations stipulated by MiCA, praised as one of the initial comprehensive legal structures for cryptocurrency worldwide, will be applicable to all member states of the EU.
Keller emphasized MiCA's main goal: fostering innovation while countering the dangers to consumer protection, market stability, financial security, and currency sovereignty. These regulations concern crypto asset issuers and service providers, aiming to curb market abuse.
MiCA came into effect in June 2023, however, the implementation of rules concerning asset-referenced and e-money tokens, primarily stablecoins, is anticipated to occur in June 2024. The rules for crypto-asset service providers, including digital wallet providers, crypto exchanges, and trading platforms, will then be implemented in December 2024 as illustrated by Keller who also discussed its timeline.
He added that the European Securities and Markets Authority (ESMA) and the European Banking Authority (EBA) are currently formulating several technical standards covering a wide range of elements.
"Around 40 technical standards are in the making at present. Primarily, they have sought public consultation on many of them, and this continues to be in progress. Once finalized, these will be forwarded to the Commission as drafts," explained Keller.
The finalized standards, when concluded, will be presented as drafts to the Commission, which then needs to be integrated into the organization's internal procedures. The European Council and Parliament will subsequently have a scrutiny period lasting two months.
Keller emphasizes that crypto service companies have been given adequate time to understand the expectations from the MiCA consultation process. Additionally, a "grandfathering clause" in MiCA enables CASPs to maintain their operations under the national rules of EU member states over an additional time period, but they cannot "passport" services throughout the EU.
Published At
11/23/2023 9:41:09 AM
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