EU SETS RULES
End for "Wild West" crypto market
The gold-rush atmosphere that prevailed for years in the completely unregulated cryptocurrency market has evaporated at the latest since the spectacular bankruptcy of Sam Bankman-Fried's once-admired crypto exchange FTX in November. On Thursday, in a global first, the EU Parliament passed rules for crypto markets. The aim is to put a stop to the Wild West rules that have prevailed in some cases to date.
Online since today, 21.59
The goal of the regulation is to curb the proliferation of cryptocurrencies and better protect consumers. Since the FTX fiasco, it was clear that cryptocurrencies and trading in them would be regulated by law sooner rather than later. In the UK and the USA, for example, intensive work is being done on similar legal rules to those now adopted by the EU. The German industry association Bitkom praised the decision in Strasbourg, saying that Europe was thus a "pioneer" worldwide and was setting "a global standard for crypto regulation." With very similar words, MEP Othmar Karas (ÖVP) was also pleased with the decision. The regulation was adopted by a large majority of 517 votes, with 38 votes against and 18 abstentions.
Online since today, 21.59
The goal of the regulation is to curb the proliferation of cryptocurrencies and better protect consumers. Since the FTX fiasco, it was clear that cryptocurrencies and trading in them would be regulated by law sooner rather than later. In the UK and the USA, for example, intensive work is being done on similar legal rules to those now adopted by the EU. The German industry association Bitkom praised the decision in Strasbourg, saying that Europe was thus a "pioneer" worldwide and was setting "a global standard for crypto regulation." With very similar words, MEP Othmar Karas (ÖVP) was also pleased with the decision. The regulation was adopted by a large majority of 517 votes, with 38 votes against and 18 abstentions.
FTX founder Bankman-Fried allegedly lost track of tens of billions and released million-dollar payments via emoji
End for "Wild West"
With the new law, Europe is ending "the Wild West of the blockchain world," said the European Parliament's rapporteur, CDU politician Stefan Berger. There are currently around 10,000 different crypto assets, he said. Spanish Green MEP Ernest Urtasun said that for more than a decade, investors who bet on the virtual money often suffered heavy losses. Moreover, cryptocurrencies offer protection to fraudsters and criminals in shady deals, he added. Evelyn Regener (SPÖ) stressed that the regulation was "long overdue." Cryptocurrencies should not be a "legal gray area," said Regener, pointing out that in the previous year alone, 22 billion euros in criminal funds had been laundered via crypto exchanges.
Elementary rules
The EU's MiCA regulation (short for Markets in Crypto Assets) requires issuers of cryptocurrencies such as Bitcoin to provide detailed information to customers and prohibits insider trading and market abuse. In addition, providers can be held liable in the event of severe losses under certain conditions. Basically, minimum rules that have been a matter of course for other exchanges for decades will thus also apply to crypto assets in the future. The EU's measures against cryptocurrency laundering focus on the point at which Bitcoin, Ether and other digital currencies are exchanged for conventional money such as euros and US dollars. Therefore, direct transfers between holders of platform-independent cryptowallets are left out. However, they would be difficult to control anyway. There is also a special regulation when crypto platforms such as Coinbase, Crypto.com and Binance process transactions with such independent wallets: Here, the information obligation applies to amounts of 1,000 euros or more.
Commissioner: bankruptcies like FTX no longer possible
EU Finance Commissioner Mairead McGuinness had expressed her conviction during a debate in Strasbourg on Wednesday that the new rules would have prevented bankruptcies like that of crypto exchange FTX in November. "Many of the practices would no longer be allowed with MiCA," she said. In a study by the Bitkom association, nearly three-quarters of German respondents said scandals like those surrounding FTX had destroyed their trust in cryptocurrencies.
ECB: Too little control of large crypto firms
However, the banking supervisor of the European Central Bank (ECB), Elizabeth McCaul, had criticized the new regulation as insufficient just a few days ago. She welcomed the rules in principle, but said that large crypto companies would be insufficiently controlled as a result. According to the MiCA rules, FTX, for example, would not have been classified as a significant crypto service provider, she criticized. Not even the world's largest crypto exchange Binance, with its estimated 28 to 29 million active users, would qualify. According to McCaul, crypto service providers classified as significant should be subject to stricter regulations - similar to banks classified as systemically important - and they should be monitored more closely than other crypto companies. But that is not what the new regulation does. The regulation still needs approval from EU countries, which is considered a formality. Then the rules can come into force gradually from July 2024. In the course of this year, the EU Commission also wants to make proposals for a digital euro.
red, ORF.at/agencies
With the new law, Europe is ending "the Wild West of the blockchain world," said the European Parliament's rapporteur, CDU politician Stefan Berger. There are currently around 10,000 different crypto assets, he said. Spanish Green MEP Ernest Urtasun said that for more than a decade, investors who bet on the virtual money often suffered heavy losses. Moreover, cryptocurrencies offer protection to fraudsters and criminals in shady deals, he added. Evelyn Regener (SPÖ) stressed that the regulation was "long overdue." Cryptocurrencies should not be a "legal gray area," said Regener, pointing out that in the previous year alone, 22 billion euros in criminal funds had been laundered via crypto exchanges.
Elementary rules
The EU's MiCA regulation (short for Markets in Crypto Assets) requires issuers of cryptocurrencies such as Bitcoin to provide detailed information to customers and prohibits insider trading and market abuse. In addition, providers can be held liable in the event of severe losses under certain conditions. Basically, minimum rules that have been a matter of course for other exchanges for decades will thus also apply to crypto assets in the future. The EU's measures against cryptocurrency laundering focus on the point at which Bitcoin, Ether and other digital currencies are exchanged for conventional money such as euros and US dollars. Therefore, direct transfers between holders of platform-independent cryptowallets are left out. However, they would be difficult to control anyway. There is also a special regulation when crypto platforms such as Coinbase, Crypto.com and Binance process transactions with such independent wallets: Here, the information obligation applies to amounts of 1,000 euros or more.
Commissioner: bankruptcies like FTX no longer possible
EU Finance Commissioner Mairead McGuinness had expressed her conviction during a debate in Strasbourg on Wednesday that the new rules would have prevented bankruptcies like that of crypto exchange FTX in November. "Many of the practices would no longer be allowed with MiCA," she said. In a study by the Bitkom association, nearly three-quarters of German respondents said scandals like those surrounding FTX had destroyed their trust in cryptocurrencies.
ECB: Too little control of large crypto firms
However, the banking supervisor of the European Central Bank (ECB), Elizabeth McCaul, had criticized the new regulation as insufficient just a few days ago. She welcomed the rules in principle, but said that large crypto companies would be insufficiently controlled as a result. According to the MiCA rules, FTX, for example, would not have been classified as a significant crypto service provider, she criticized. Not even the world's largest crypto exchange Binance, with its estimated 28 to 29 million active users, would qualify. According to McCaul, crypto service providers classified as significant should be subject to stricter regulations - similar to banks classified as systemically important - and they should be monitored more closely than other crypto companies. But that is not what the new regulation does. The regulation still needs approval from EU countries, which is considered a formality. Then the rules can come into force gradually from July 2024. In the course of this year, the EU Commission also wants to make proposals for a digital euro.
red, ORF.at/agencies
Source (German)