- The end of June may bring new EU cryptocurrency legislation
- EU lawmakers seek global leader in digital asset regulation
- US bipartisan effort to regulate crypto introduced in June
The three bodies involved in the negotiations on EU rules regarding Bitcoin and other cryptocurrencies hope to complete work on the Markets in Crypto-Assets legislation by the end of June, as pressure rises to protect investors in an imploding market.
The EU’s clumsy legislative machinery involves a “trilogy” between the European Commission, the European Parliament and the 27 Member States. Negotiators met in mid-June and plan to meet again on June 30 to complete the package by the end of France’s six-month rotation in the presidency, according to a Bloomberg report.
NFT’s Legislation in Flux
Among other things, retailers still need to decide whether to include non-fungible tokens (NFTs) in the legislation and whether to require cryptocurrency providers to disclose energy consumption due to the massive computing power needed for mining and transactions.
The EU started work on MiCA in 2020 in an attempt to establish common rules on crypto for the bloc. As it has done with regard to privacy issues and high technology, the EU wants to be at the forefront globally in terms of regulating digital assets.
The EU seeks to take regulatory lead
EU Commissioner Mairead McGuinness on Friday called on all parties to reach a compromise on the rules and finalize them. Terra stablecoins crash in May, halting payouts of Celsius networkand concern that Russia is using cryptocurrencies to avoid sanctions has made the rules more urgent, she said.
Celsius Network says the global sale of cryptocurrencies makes it a challenge to normalize its operations, and warns that it will take some time. Babel Finance, a crypto lender in Hong Kong, has also suspended disbursements and redemptions due to liquidity problems, and Hong Kong’s crypto exchange Hoo halted transactions as disbursements drained its funds.
Verena Ross, head of the European Securities and Markets Authority, called last month for work on the crypto rules to be completed, saying she was waiting with “great impatience” for the parties to reach an agreement.
Cryptocompanies are struggling to hire compliance officers
Cryptocompanies are struggling to hire compliance officers, while regulators are drafting new rules or figuring out ways to apply existing rules to digital assets. Companies are realizing that rules are not only inevitable, they can help keep the industry in a set of crash barriers.
I the USAthat The Securities and Exchange Commission has dropped the ball on crypto regulation, according to Commissioner Hester Peirce, who says the lack of adoption of rules keeps her awake at night.
“We are not allowing innovation to evolve and experimentation is happening in a healthy way, and there are long-term consequences of that failure,” Peirce told CNBC at a blockchain summit in late May.
In early June, Senators Cynthia Lummis and Kirsten Gillibrand introduced one bipartisan bill to build a regulatory framework for crypto markets. The Responsible Financial Innovation Act assigns regulatory authority over most spot markets for digital assets to Commodity Futures Trading Commission.
Bitcoin, the leading speculative cryptocurrency, has plunged below $ 20,000 for the first time since November 2020, leaving investors vulnerable and regulators worried not only about protecting them but also about maintaining financial stability and preventing economic crime.
Bitcoin Daily Price Chart: June 22, 2022
Fabio Panetta, a member of the European Central Bank’s Executive Board, warned last month that the crypto market is now larger than the $ 1.3 trillion subprime loan market was when it launched the 2008 financial crisis.
Regulators have already started enforcement with restrictions on money laundering. The BitMex crypto platform was last year fined $ 100 million by US regulators for failing to conduct AML checks.
One of the most sophisticated European regulators, the UK Financial Conduct Authority, is awaiting legislation that extends the supervision of crypto firms beyond money laundering. So far, it has found only 33 companies it is willing to approve.