Eurozone countries will be warned by the ECB about the fragmentation of crypto regulations
Updated: Aug 20, 2022
Before the implementation of comprehensive EU-wide crypto rules, the European Central Bank (ECB) is anticipated to issue a warning to countries in the eurozone later today about the risks of national fragmentation of crypto regulations.
The historic markets in crypto-assets (MiCA) proposals, which aim to "protect investors and preserve financial stability" in the union, were approved provisionally by the EU Council last week.
The French Minister for the Economy, Bruno Le Maire, promised that the new rules would "put an end to the crypto wild west" and that they would place cryptocurrency assets, cryptocurrency asset issuers, and cryptocurrency asset service providers under a regulatory framework for the first time.
Before the entire package can be implemented in 18 months, the ECB is reportedly concerned about the current fragmented approach by national regulations between banks and crypto providers.
At a supervisory meeting later this week, the governing body is anticipated to bring up the need for "harmonisation." The ECB revealed it had conducted a "deep dive into crypto-asset leverage and crypto lending" in May, when it issued a warning that European banks' connections to cryptocurrency and DeFi could endanger the stability of the financial system. A few international and eurozone banks, according to the regulator, are "already trading and clearing regulated crypto derivatives, even if they do not hold an underlying crypto-asset inventory." Additionally vocal in her criticism of cryptocurrencies, ECB President Christine Lagarde told a Dutch television station that a cryptocurrency token was "worth nothing, it is based on nothing," and that there was "no underlying asset to act as an anchor of safety." Fabio Panetta, an executive with the European Central Bank, compared the industry to a "Ponzi scheme" and called for regulatory restraint to prevent a "lawless frenzy of risk-taking." A level playing field would be "important," according to Andrea Enria, chair of the ECB's banking supervisory board, who also noted that the ECB had noticed "differences in national regimes around crypto." By fLEXI tEAM