The European Parliament has approved some of the most sweeping digital currency regulations the continent has ever seen. A digital euro is also planned to go into effect at some point later in the year.
European Regulators Are Getting Serious
The goal is to prevent all crypto traders from ongoing abuse and manipulation. The rules stem from concerns arising from last November’s FTX debacle. As one of the leading digital currency exchanges in the world, the company came crashing down in a heaping pile of bankruptcy and fraud after it was alleged executives used customer funds to pay off loans for another company and buy luxury Bahamian real estate.
European Union (EU) commissioner for financial services Mairead McGuinness explained in a recent debate that the present rules Parliament is implementing would have likely prevented FTX from happening or could have at least minimized the damage done by those in charge had they been established earlier.
She emphasized the importance of ongoing digital currency regulation in her interview by saying that the present rules system requires that all wallet providers (including exchanges) will be required to take measures to ensure all digital currency assets held within their systems remain protected. She also said that those that fail will endure harsh penalties. She commented:
We believe that had FTX, for example, been captured under EU jurisdiction, many of its practices would not have been permissible under MiCA.
In addition, the rules are set to bring a certain level of eco-friendly protocols to the present arena. She said that all crypto companies and large providers must provide information on how they’re planning to reduce energy use, carbon emissions, and overall pollution. Lastly, the present regulations will make crypto mirror some of the aspects of traditional finance.
All this, the European Union feels, will make it much harder for cyberthieves to make off with digital assets. Ernest Urtasun – one of the EU lawmakers pushing the regulations forward – said that these regulations bring an end to the “Wild West” status the crypto industry has been holding over the past several years. Urtasun said:
For over a decade, the lack of regulation has resulted in massive losses to many first-time investors and provided a safe haven for fraudsters and international criminal networks.
Not Everyone’s Happy
Despite being considered a solid step forward, some – like Elizabeth McCaul, a European Central Bank supervisor board member – don’t think they’re going far enough and were critical of the regulations. McCaul said:
In line with the principle of proportionality, significant CASPs should be subject to both stricter requirements and enhanced supervision. Neither of the two is catered for by MiCA… What we believe is that having a regulatory framework allows the industry to evolve in a more cohesive and safer environment.
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