With the bear market hitting crypto businesses across the spectrum, new crypto regulations are being sweeped in by the EU. Authorities have agreed on standards designed to protect consumers and increase transparency from companies in EU member states, with the European parliament settling the terms of rules while allowing the market to flourish.
The times of crypto regulation are now becoming a reality as Europe has reached a deal to regulate trading of crypto assets within the region. Late last Thursday the set of rules, known as the ‘Regulation on Markets in Crypto-assets (MiCA)’ was progressed. MiCA now represents the first effort to impose standards throughout the region, rather than a patchwork of national rules. With the ensuing crypto winter, and new crypto traders joining in the fold, along with this sentiment and price devaluation hitting lending platforms, exchanges and fund managers hard, the time is now to get your house in order. It’s no secret that since November 2021, the size of the market has fallen dramatically, with Bruno Le Maire, French finance minister stating that, “Recent developments on this quickly evolving sector have confirmed the urgent need for an EU-wide regulation.
These new rules would mean that crypto-asset providers will now require authorisation from one of the EU’s national market regulators, with local regulators sharing information with the pan-European regulator, ESMA. Spanish MEP Ernest Urtasun said that the union is “moving from the wild west of unregulated and risky digital assets to a safer crypto sphere”. Given this move now, regulated companies will not only face tougher standards, but could also be liable in the event that investors lose funds. In addition, these entities will also need to disclose information on their operations’ environmental impact.
On another note MiCA has also detailed new rules for stablecoins – which many people would say is the soul of the crypto economy. There are tokens which are designed to be pegged to other assets – for example: the dollar or euro – acting as the foundation for liquidity and stability within the crypto world. One market which has seen a lot of scrutiny over the past couple of months with the meltdown of the stablecoin; TerraUSD. There was also word on the move within Tether (USDT) straying away from its US dollar peg during this time, which shook a lot of investors, traders and crypto companies alike.
MiCA will be pushing large stablecoin providers with strict rules, especially those that adhere to maintaining sufficient reserves to cover claims, and providing immediate redemption rights to holders. Included, there will also be a limit on €200 million in transactions each day as part of restrictions if stablecoins are used widely as a means of payment. This new initiative came right after the EU agreed on a set of other rules affecting crypto businesses (the so-called FATF travel rule), ones which focus on AML regulations and the tracing of digital assets – crypto asset business are obligated to collect and make accessible certain information about parties on either side of a transaction. These will be focused on providers like exchanges and un-hosted or self-hosted wallets like those via MetaMask.
“The finalised version of the Transfer of Funds Regulation and MiCA can still be viewed as a win for the crypto industry and for self-sovereignty, despite some setbacks,” Alex Thorn, the head of research at digital asset group Galaxy Digital (ticker: GLXY.Canada), wrote in a note. “Europe is taking the global lead when it comes to regulating crypto, which will certainly influence how other economies shape their regulatory frameworks to oversee the industry.”
What does this mean for the crypto industry as a whole, should we be scared of what is to come, will this continue to inflict a bearish sentiment across the market – or the contrary. This has been enacted to protect users and businesses from a bearish sentiment as such happening again due to upregulation and prevention of market manipulation. The time is now for crypto companies to self-regulate and self-comply with the upcoming shift in the market to continue to grow within the ecosystem. With these new regulations, companies like Sekuritance are at the forefront of businesses needing a full RegTech suite to comply with all the new regulations coming about.
Visit www.sekuritance.com today, and find out how we can help you implement a fast and effective onboarding system that gets results.
The Sekuritance RegTech platform provides a single platform for every eGRC need, including end-to-end AML/CTF, CECL, FCPA, vendor management, beneficiary onboarding, investor check, card processing MFA checks, blockchain wallet checks, cyber-risk assessments, and other RegTech or Business Process Management requirements.
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