EU Parliament research suggests stricter crypto regulation for non-EU countries.

EU Parliament research suggests stricter crypto regulation for non-EU countries.

The Need for Tighter Oversight in the Global Cryptocurrency Market

The global cryptocurrency market has been gaining significant attention and adoption in recent years. However, concerns over stability and development persist, prompting the European Parliamentary Research Service (EPRS) to call for tighter oversight from non-European Union (EU) regulators. In their report, the EPRS emphasized the potential risks and implications of the Markets in Crypto-Assets Regulation (MiCA) Act and the dependence on non-EU countries’ policy actions.

The Challenges Ahead

With the implementation of MiCA expected by December 2024, the EPRS report stressed the need for a robust and harmonized regulatory framework. The authors expressed concerns over potential risks to financial stability, the impact on the market appeal of cryptocurrencies, and the mainstream adoption of stablecoins. To address these challenges and ensure a more secure and resilient global cryptocurrency market, cooperation and oversight from non-EU regulators are crucial.

Fragmented Regulatory Landscape in the United States

One of the significant concerns identified in the report is the fragmented regulatory landscape in the United States. With various state-level and federal stakeholders involved, the absence of a unified regulatory approach indirectly affects legal clarity and regulatory certainty. The lack of consistency and coordination in regulations across different jurisdictions poses challenges for market participants and inhibits the establishment of a cohesive global framework.

Divergence between the UK and the EU

The report also highlights the divergence expected between the United Kingdom (UK) and the EU regarding the identification of crypto-assets. Specifically, the UK’s Financial Services and Markets Act and a study conducted for the European Parliament indicate a potential significant divergence in their approaches over the coming years. This divergence could create regulatory uncertainties and potentially hinder cross-border operations within the EU and between the UK and the EU.

Overview of crypto-asset regulations in EU, the United Kingdom, and the United States Overview of crypto-asset regulations in EU, the United Kingdom, and the United States. Source: europarl.europa.eu

Aligning Malta’s Regulations with MiCA

Recognizing the need for alignment with the upcoming MiCA regulations, the Malta Financial Services Authority (MFSA) has initiated a public consultation on changes to its crypto regulations. The proposed changes aim to harmonize rules for exchanges, custodians, and portfolio managers with the EU’s regulatory framework. This proactive step by Malta demonstrates the importance of adapting and aligning regulatory practices across different jurisdictions to maintain stability and facilitate global market growth.

Building a Stronger and Secure Future

To ensure the stability, development, and mainstream use of cryptocurrencies, rigorous and coordinated oversight is necessary. Non-EU regulators must work hand-in-hand with the EU and its member states to establish a robust global regulatory framework. Such collaboration would address concerns around financial stability, encourage broader market adoption, and enhance the protection of investors’ interests.

In this ever-evolving landscape of the blockchain industry, regulations play a crucial role in establishing trust and confidence. Creating an environment that fosters innovation, while also safeguarding against potential risks, requires striking a delicate balance. By working together and aligning regulatory approaches, global regulators can help shape a secure future for the cryptocurrency market.

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