Banks Don’t Need Extra Crypto Protections Yet, EU Regulator Says

EU Commission to Study Real-Time DeFi Activities

  • The EU has focused on finding the perfect solution for regulating the crypto industry.
  • The MiCA bill addresses topics such as stablecoins, consumer protection, and company accountability.
  • The bill, alongside other policies, will not only govern the European crypto market but also serve as a template for lawmakers around the world.

The Decentralized Finance market (DeFi) has been identified as a specific interest of the European Union following months of reports of hacks, rug pulls, and project collapses. As a result, the European Commision, which is responsible for enforcing legislation, has issued a request for a project to monitor the DeFi industry by studying Ethereum data.

The Commission says it aims “to develop, deploy and test a technological solution for embedded supervision of decentralized finance (DeFi) activity.” The project, according to the European Commission, will focus on “automated supervisory data gathering” from the Ethereum blockchain and track DeFi trading activity in real-time.

DeFi applications were mostly responsible for the crypto bull run of 2021. Most of the protocols offered lucrative rewards, capturing the attention of investors, which in turn threw billions of capital into the industry. However, these DeFi protocols have been hardly hit by fraudsters and hackers due to possible lapses in their security.

Platforms like Uniswap, a decentralized exchange that enables anybody to exchange cryptocurrency tokens without giving any information about themselves, have become popular in the industry. Despite their decentralized approach, global regulators and lawmakers are getting more concerned that these platforms are being exploited to get around existing rules and tax obligations.

European Parliament Committee Votes on MiCA Framework

Following a vote by the European Council, decision-makers of the European Parliament Committee on Economic and Monetary Affairs, or ECON, have approved the Markets in Crypto-Assets framework, (MiCA).

ECON member Stefan Berger revealed in a tweet that the committee has approved the MiCA law as an outcome of trilogue negotiations between the EU Council, the European Commission, and the European Parliament.

The MiCA proposes a uniform regulatory framework for cryptocurrencies across the 27 member states of the European Union. It was originally presented to the European Commission in September 2020 and would begin a new phase of crypto regulation across Europe. The change represents yet another important step taken by European authorities to make sure that the cryptocurrency market complies with their regulations. 

Due to its extensive scope, the bill is expected to have a significant effect on the cryptocurrency market. The MiCA bill will presumably address the prevention of money laundering, consumer protection, company accountability, the industry’s effects on the environment, and stablecoins.

Following the vote on MiCA, the EU Parliament unanimously endorsed a temporary agreement on the Transfer of Funds Regulation, which establishes compliance requirements for crypto assets in a bid to combat money laundering. If approved, the two legislative frameworks would govern EU member states but would also serve as a model for other countries’ legislators considering cryptocurrency regulations.

Lawrence Woriji Verified

Lawrence has covered some exciting stories in his career as a journalist, he finds blockchain-related stories very intriguing. He believes Web3 will change the world and wants everyone to be a part of it.

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