Creating a regulatory framework has been the main topic of discussion amongst regulators globally. The nascency and volatility of the sector have prompted various entities to form local laws to mitigate the risks of transacting in virtual currencies.
However, local laws can only do so much. Given the lack of homogeneity, there’s an imbalance in how certain crypto aspects are treated. For that reason, the European Securities and Markets Authority boss Verena Ross is calling for the urgent implementation of common regulations.
Ross told Bloomberg that she awaits the passage of the EU’s crypto regulation blueprint into law. She believes that the high inflation will coerce retail investors to turn to virtual currencies to maximize their earnings. According to her, this could lead to higher risks.
Ross Calls for Universal Regulatory Oversight
Ross emphasized the need for a general regulatory framework that will address the challenges in the cryptocurrency sector. Currently, the main regulators in EU member countries are responsible for overseeing the industry based on their local guidelines. Therefore, each country addresses the challenges within the sector differently.
Ross said EU regulations are absent for cryptocurrency exchanges at the moment. Currently, national supervisors handle them based on their laws. She said a common framework would help national regulators to enforce crypto laws efficiently.
MiCA Still Under Review
EU members are pinning their optimism of regulation of crypto-assets on the MiCA draft. MiCA, a framework drafted in 2020, proposes stipulations for overseeing the sector. The draft has been due for implementation but is still under review by the Parliament.
Ross is happy about the progress but hopeful the Parliament concludes its review soon and passes MiCA within two years. Ross isn’t the only one concerned about regulating the sector.
ECB President Christine Lagarde has also called for an effective crypto oversight. She is an anti-crypto who once said virtual currencies are worth nothing.
Francois Villeroy, a member of the Governing Council, is also an anti-crypto and has frequently criticized the sector for its unrealistic rewards.
The ECB has voiced its worry about the link between the crypto sector and the mainstream financial industry. In a report, the regulator pointed out how investors endured a market loss of €1.3T without facing any financial danger.
The monetary regulator also added that the cryptocurrency market is locomoting to a level where investors will risk being poor. It will be their case if they continue to invest in unbacked virtual assets.