A cautionary statement has been released by a member of the Supervisory Board of the European Central Bank with regard to the proposed crypto regulations set forth in the Markets in Crypto-Assets (MiCA) bill of the European Union. The member has expressed concerns that although the bill will offer some crucial safeguards to prevent incidents such as the FTX case, the current regulations may not be sufficient on their own.
Improper Crypto Regulations
In a recent blog post shared by the European Central Bank (ECB), Elizabeth McCaul, a distinguished member of the ECB Supervisory Board, addressed the topic of regulating cryptocurrencies. McCaul expressed her concern that the regulatory measures currently proposed by the European Union are insufficient and must be reinforced to better manage the risks that come with cryptocurrencies.
She emphasized the need for the proposed Markets in Crypto-Assets (MiCA) bill, which is scheduled to be voted on by the European Parliament later this month, to be strengthened to ensure the effective handling of crypto-related risks.
The board member of the ECB emphasized the need for significant crypto asset service providers (CASPs) to adhere to stricter requirements and enhanced supervision. The board member explicitly stated that MiCA does not cater to either of these needs.
Furthermore, while acknowledging the importance of the safeguards MiCA will provide to prevent incidents like the FTX case from occurring, such as strong governance principles, including the segregation of customer funds and external audits, the board member underscored the need for additional measures.
Regulations concerning CASPs
During a recent discussion, McCaul conveyed her concerns about the method employed to gauge the scale of crypto-asset service providers (CASP). She pointed out that the now-defunct crypto exchange FTX would not have been considered a significant CASP under MiCA as it did not meet the requirement of having 15 million active users.
Additionally, as a board member of the ECB, she emphasized the importance of developing new quantitative metrics for different businesses, such as trading platforms that can utilize trading volume and custodian businesses that can employ assets under custody.