We’ve embarked on a market-defining journey and there is no time to waste. Today, the cryptocurrency market is largely unregulated, and consumers remain vulnerable.
Although new wallet technologies and crypto exchanges are developing better infrastructure more typical of traditional financial markets, the urgency for better regulation is clear to all stakeholders. Set against the backdrop of a corrective phase in cryptocurrency trading, the regulatory apparatus that will underwrite the coming era of blockchain hegemony across financial systems is beginning to take shape.
EU lawmakers have recognized the full potential of the crypto and blockchain market opportunity will only be realized through the creation of a regulatory framework all stakeholders can trust in. Accordingly, on June 30, the European Commission, EU lawmakers and member states concluded a tripartite agreement known as ‘Markets in Crypto-Assets’ (MiCA).
Its origins lay within the expansive Digital Finance Package adopted by the EU in September 2020, and MiCA will apply to all EU member states. The agreement sets out a broad legal framework for assets, markets, and service providers not currently regulated on an EU level. Moreover, it offers a gateway to licensed services across the EU when the rules come into force in 2024.
Speeding up regulation
Commenting on MiCA, European Commission Executive Vice-President and Trade Commissioner, Valdis Dombrovskis said, “The future is digital. The crypto market has reached a point of no return. It is no longer a passing trend and is here to stay. Those who ignore it will be left behind – including regulators, economies, companies and individuals alike.”
Regulatory moves are also afoot at the G20 watchdog, the Financial Stability Board (FSB). Hot on the heels of the EU move, FSB announced on July 11 that a robust Crypto Regulatory Framework will be presented to its forum in October The vast wheels of legislation are now turning in recognition of an idea that’s time has come. Cryptocurrency and blockchain represent the largest evolutionary step in market architecture for decades. Of course, the imminent paradigm shift in market speed, security and efficiency has to be matched by commensurate regulatory frameworks.
Embed investor trust
Market confidence and the hard won trust of consumers are, to a large degree, in the gift of regulation. Robust protections are a non-negotiable principle upon which healthy markets operate and mature regulators promote.
That is why, in the pursuit of a healthy marketplace, we should be committed to a ‘regulatory-first’ philosophy. We need to collaborate with all relevant authorities to help inform legal frameworks that mitigate financial crime and market misconduct. Market participants deserve nothing less and their confidence must be earned through a blend of transparency, efficiency and above all, security within the rule of law.