After the president of the European Central Bank (ECB) called for stronger control in cryptocurrency staking and lending, and after the rules governing Regulation on Markets in Crypto-Assets (MiCA) were finalized, the regulator’s concern on cryptocurrencies has continued. It is now anticipated by the crypto community that the ECB will issue a warning to the Eurozone in the near future.
The ECB planned to issue a harsh warning to eurozone nations this week about the perils of national regulators conceivably jumping ahead of the MiCA law, which is not slated to take full effect until 2024. In point of fact, the MiCA rules are scheduled to be enacted into law in 2023, and their comprehensive implementation is scheduled to take place over the course of the succeeding 18 months.
According to reports, their primary responsibility is to safeguard investors’ and customers’ interests in the cryptocurrency industry and its important assets, such as Bitcoin (BTC), which has been experiencing substantial losses. As per the individuals who are aware of the negotiations, the warning will be delivered during a session of the ECB’s supervisory board on July 5, and it will ask for the convergence of various laws prior to the EU-wide agreement becoming law.
Potential Challenges In The Coming Years
One of the national regulators in one of the countries that is part of the Eurozone stated that the current scenario is challenging since the national regulators are confronted with a conundrum. As the amount of pressure coming from the industry increases, another national regulator is said to have indicated that national authorities will have to come up with solutions.
Some financial institutions have requested more information regarding the kind of activities that are within their safe operating parameters. In the cryptocurrency business, some firms have argued that there is a requirement for a more relaxed attitude, while others have advocated for the industry to be regulated in order to increase its legitimacy.
In the meanwhile, as per the new EU legislation that was approved last week, cryptocurrency transfers would be monitored and recorded. The new set of rules for crypto transfers will be designed to prevent additional criminal acts as well as money laundering and financing for terrorist organizations.
A Blessing In Disguise?
Particularly, Richard Gardner, CEO of the cryptocurrency exchange solution provider Modulus, remarked on the forthcoming warning, stating that it makes complete sense that the ECB would choose to avoid an accumulation of national legislation on digital currencies. It could, for example, cause operators to seek friendlier environments. In addition, it could establish an unequal competitive landscape within the EU, causing issues among international corporations.
On the other side, he thinks that the fact that MiCA has come this far is a good indicator and that financial institutions need to be aware of what they are capable of doing and how they may engage in a manner that is both safe and lawful. Notably, towards the end of June, it was reported that Christine Lagarde, the president of the ECB, became the first person to specifically demand better monitoring of the practices of staking and lending in decentralized finance (DeFi), which she said were undoubtedly rising.