The planned regulation in the European Union for companies in the crypto industry does not go far enough from the point of view of ECB banking supervisor Elizabeth McCaul. Gaps in new EU MiCA (Markets in Crypto-Assets) regulations must be addressed, McCaul demanded in a blog post published on ECB Banking Supervision’s website on Wednesday.
The EU Parliament is expected to finally vote on the new rules later this month. Expectations are high. The collapse of the FTX crypto exchange last November sent shockwaves across the financial industry worldwide and increased calls for more effective regulation of such companies.
McCaul wrote that the new EU rulebook would provide important safeguards to prevent incidents such as the collapse of the FTX. This included strict corporate management (governance) principles such as the segregation of client funds and external audits. “Nevertheless, certain areas still need to be strengthened,” she said. McCaul is on the board of the banking regulator SSM, which is affiliated with the European Central Bank (ECB). This monitors the major banks in the eurozone.
FTX would not have been classified as significant
The banking regulator sees weaknesses in measuring the importance of a crypto service provider. For example, under MiCA rules, FTX would not be classified as a major crypto service provider, she criticized. Even the world’s largest crypto exchange Binance, with an estimated 28 to 29 million active users, would not meet the requirements. McCaul argues for improvements here. “The type of business may be taken into account, for example the volume of trading venues or the assets held by custodial service providers.” Thresholds should also be measured at group level rather than individual company level.
According to McCaul, crypto service providers that are classified as important should be subject to stricter regulation and better scrutiny than other crypto companies. Neither point is guaranteed with the MiCA scheme. Exchanges like FTX use a group structure for their transactions, while MiCA, on the other hand, only works with individual companies, she complained. “I think big players like FTX or Binance need a consolidated approach, even if that requires changes to existing legislation.”
Source: Krone
I’m Ben Stock, a journalist and author at Today Times Live. I specialize in economic news and have been working in the news industry for over five years. My experience spans from local journalism to international business reporting. In my career I’ve had the opportunity to interview some of the world’s leading economists and financial experts, giving me an insight into global trends that is unique among journalists.
