The ECB will send a warning to the eurozone over the alignment of crypto law
As a result of the European Central Bank (ECB) president’s requests for more regulation of cryptocurrency staking and lending, as well as the finalisation of the Regulation on Markets in Crypto-Assets (MiCA) guidelines, the regulator is likely to issue a warning.
Financial Times’ Laura Noonan reported on July 4 that the ECB planned to issue a harsh warning to eurozone nations this week about the perils of national regulators possibly jumping ahead of the MiCA legislation, which is not slated to take full effect until 2024.
In reality, the MiCA regulations will become law in 2023, and their full implementation is scheduled for the following 18 months. According to reports, their major responsibility is to safeguard investors’ and consumers’ interests in the crypto market and its important assets, such as Bitcoin (BTC), which has been experiencing significant losses.
According to those familiar with the deliberations, the warning will be delivered at a meeting of the ECB’s supervisory board on July 5 and will ask for the harmonisation of various laws before the ratification of the EU-wide accord.
Difficulties in the long term
A national regulator in one eurozone country said that the national regulators are in a tough position: “It’s incredibly difficult. (…) With MiCA still, 18 months away, is it better to say, “Until it’s in, do anything you want, there’s no regulation” or to attempt to get control?”
According to a story by the Financial Times, another national regulator said that national authorities would “need to come up with solutions” as industry pressure increases.
Other banks have requested clarification on the activities they may safely engage in, while some crypto businesses have advocated for a softer approach and others have advocated for the industry’s legitimacy to be enhanced by regulation.
A good sign?
In particular, Richard Gardner, CEO of the crypto exchange solution provider Modulus, reacted to the impending warning, stating:
Finextra stated on July 4 that he believed MiCA “coming thus far” was a good indication and that “financial institutions need to grasp what they can do and how they can participate securely and lawfully.”
Notably, towards the end of June, Finbold reported that Christine Lagarde, the head of the ECB, was the first person to seek stronger monitoring of the activities of staking and lending in decentralised finance (DeFi), which she said were “certainly expanding.”