The European Commission is urging its members to agree on proposed Market for Crypto Assets (MiCA) regulations this fall, according to a statement by EU Financial Services Commissioner Mairead McGuinness on Wednesday at a web forum.
The commission also wants to finalize its proposed regulatory sandbox for financial products based on distributed ledger technology (DLT) by the end of the year, McGuinness said, adding that "cryptoassets are growing rapidly, enabling local firms to enter the market while also attracting retail investors. It is our policy and our responsibility as policy makers to put sensible rules in place as soon as possible."
The tight deadline underscores the urgent pace of EU regulators in developing a comprehensive regulatory framework for cryptoassets. But there is something to be said for all of this. Back in July, the EU embarked on new crypto regulations aimed at ensuring that all cryptocurrency transactions are secure, in addition to considering a halt to all cryptocurrency transactions equal to or above €10,000. In a statement, the European Commission explained that given that virtual asset transfers face similar money laundering and terrorist financing risks as wire transfers, it seemed logical to use the same legislative instruments to address these common problems. The EU is now seeking to ensure that all cryptocurrencies are traceable so that they can track any parties involved in malicious or illegal activity
Furthermore, in October, ECB Governing Councilor Villeroy urged the need for the EU to quickly adopt the Markets in Cryptocurrencies Regulation (MICA). Regulation should also be strengthened, as decentralized finance is making significant developments. Innovation is certainly positive, but if left unregulated, it can reduce financial stability, while there are also issues of market concentration and customer protection. Regulators should consider a combination of activity and entity approaches for large technology companies operating in the financial services industry. It may be possible to organize specific legal entities within large technology companies to subject them to financial regulation.
However, according to a previous survey, most European citizens do not believe that the European Union (EU) will come up with effective cryptocurrency regulation proposals. This survey, conducted by Redfield & Wilton Strategies, shows that these citizens have more confidence in local legal proposals. Due to the different attitudes towards cryptocurrencies, member states have so far adopted a local approach. The survey was conducted in 12 states and had over 31,000 participants.
The survey also revealed that most citizens know very little about cryptocurrencies. It is this lack of knowledge that citizens cite as the main reason for not owning cryptocurrencies. Furthermore, most citizens prefer the issuance of local cryptocurrencies over the recently proposed digital euro. Furthermore, nearly 60% want their national government to decide on financial regulation rather than relying on the EU.