ECB Board Member Warns EU’s New Crypto Rules Are Not Sufficient – Regulation Bitcoin News

A member of the European Central Bank’s supervisory board has warned that the crypto rules in the EU’s Markets in Crypto-Assets (MiCA) bill “will not be sufficient on their own.” While stressing that “MiCA will set out important safeguards to prevent incidents similar to the FTX case from occurring,” she cautioned: “Certain areas still need further strengthening.”

ECB’s McCaul warns against EU’s insufficient crypto regulation

Elizabeth McCaul, a member of the European Central Bank Supervisory Board, discussed cryptocurrency regulation in a blog post published by the ECB on Wednesday.

She explained that the regulatory framework proposed by the EU for crypto-assets is insufficient and needs to be strengthened to effectively address crypto-risk. The European Parliament will vote on the Markets in Crypto-Assets (MiCA) bill later this month. McCaul believed:

While the new Basel standard and MiCA are important milestones, I am afraid they will not be sufficient on their own.

The ECB board member stressed that significant crypto-asset service providers (CASPs) “should be subject to both stricter requirements and enhanced supervision”, stressing that “neither is covered by MiCA”.

While noting that “MiCA will set out key safeguards to prevent incidents similar to the FTX case from occurring, such as strong governance principles such as segregation of client funds and requirements for external audits,” she warned:

Certain areas still need to be further strengthened.

McCaul raised concerns about how the size of crypto-active service providers is measured. She pointed out that the collapsed crypto exchange FTX “would not have been classified as a significant CASP under MiCA because it did not reach the threshold of 15 million active users.” She continued:

In fact, Binance, which is the largest crypto player, is said to have between 28 million and 29 million active users worldwide, but would probably not even reach the threshold to be classified as significant in the EU.

The ECB board member also highlighted the need to develop new quantitative metrics for different types of businesses, such as trading volume for trading platforms or assets under custody for custodians.

Noting that “MiCA only applies at the individual unit level,” she suggested that thresholds be assessed at the group level rather than at the individual unit level due to the complexity of operations. In addition, she said that conflicts of interest must not only be identified within the group, but also among affiliated entities.

What do you think of ECB board member saying EU crypto rules are insufficient? Let us know in the comments section below.

Kevin Helms

A student of Austrian economics, Kevin found Bitcoin in 2011 and has been an evangelist ever since. His interests lie in Bitcoin security, open source systems, network effects and the intersection of finance and cryptography.