The European Central Bank Supervisory Board member warned that the crypto rules included in the EU’s crypto asset market (MiCA) bill “are not sufficient by themselves.””MiCA will not be able to prevent the FTX incident and similar While stressing that it “establishes important safeguards to prevent incidents from occurring,” she cautioned: “Further strengthening is still needed in certain areas.
ECB’s McCaul Warns of Inadequate EU Crypto Regulation
Elizabeth McCaul, a member of the European Central Bank Supervisory Board, addressed cryptocurrency regulation in a blog post published Wednesday by the ECB.
She explained that the European Union’s proposed regulation on crypto assets is inadequate and needs to be strengthened to effectively address crypto risks. The European Parliament is scheduled to vote on the crypto asset market (MiCA) bill later this month. McCall opined:
While the new Basel standards and MiCA are important milestones, I am not sure that they are enough.
The ECB Director stressed that critical crypto asset service providers (CASPs) “should be subject to both stricter requirements and enhanced supervision,” and that “neither of these two are covered by MiCA.”
While noting that “MiCA establishes important safeguards to prevent the occurrence of incidents similar to the FTX incident, including strong governance principles such as segregation of client funds and external audit requirements,” he warned:
Some areas still need further strengthening .
McCaul expressed concern about how the size of crypto asset service providers would be measured. She noted that the collapsed crypto exchange FTX “would not have been classified as a significant CASP under MiCA because it had not reached the threshold of 15 million active users.” She continued:
In fact, the largest crypto player, Binance, which reportedly has between 28 and 29 million active users worldwide, would probably not even meet the threshold to be classified as significant in the EU.
The ECB Director also stressed the need to develop new quantitative indicators for different types of business, such as trading platform volumes and assets under custody for custodian business.
Noting that “MiCA only applies at the level of individual entities,” he suggested that the thresholds be assessed at the group level rather than at the individual entity level due to the complexity of the business. He further stated that conflicts of interest need to be identified not only within a group, but also between related entities.
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