The top financial services official for the EU told a news publishing house at the World Economic Forum on Thursday that the new crypto regulations are only useful once the rest of the world adopts them.
While warning that future crypto developments must be centered on people, European Commissioner Mairead McGuinness said the turbulence in the cryptocurrency market had given those arguing for a worldwide regulation more ammunition.
McGuinness was pleased that the EU was the first significant jurisdiction to do so with its historic Markets in Crypto Assets regulation (MiCa). However, given that cryptocurrency is a worldwide development and requires global regulation, she was skeptical that it would be helpful. Blockchain technology is “borderless,” according to her.
If we fail to do that global approach, we’re going to find that there’s more and more problems. The technology is borderless.
The Financial Stability Board, an international organization that makes recommendations regarding the global financial system, has already laid the groundwork for a potential worldwide regulatory framework for cryptocurrencies. The board’s chairman, Klaas Knot, stated to a crowd in Davos that he hopes to finish controversial ideas before the summer. However, McGuinness was open about the difficulties of putting international laws into practice.
The MiCa establishes reserve requirements for stablecoins; digital currencies typically pegged to the dollar, and governance guidelines for cryptocurrency businesses. It is scheduled to be formally approved by the European Parliament in April. However, exchanges or digital wallet providers trying to serve EU clients from regulatory havens, which McGuinness alluded to as “sunny places for shady people,” raise concerns that MiCa will be compromised.
Similar remarks had been made previously during a panel discussion on striking the proper balance for cryptocurrencies by Klaas Knot, the head of the Financial Stability Board and a European regulator.
McGuinness’ quest may benefit from the struggles of 2022, when several significant crypto enterprises failed, including the Bahamas-based crypto exchange FTX, stablecoin issuer Terraform Labs, and lenders Voyager Digital and Celsius Network.
She believes that because they have seen how things may go wrong, politicians and authorities are in a “good place.”
We’re now, I think, in a good place because we have seen very visible examples of how things can go wrong. I think the world now knows that if it happened there, it can happen anywhere, so let’s talk.
Although MiCa will go into force at the beginning of 2025, she explained that it wouldn’t be the tale’s end because cryptocurrency is evolving swiftly. They will need to make adjustments to the existing regulations. Additionally, McGuinness advised against hastily enacting regulations in fields like decentralized finance (DeFi) that still need to be better understood by authorities and lawmakers.