Christine Lagarde, head of the European Central Bank (ECB), has once again reiterated the need for bringing crypto under regulatory oversight in the European Union (EU) amid the collapse of cryptocurrency exchange FTX.
In a speech at the Hearing of the Committee on Economic and Monetary Affairs on Monday, Lagarde mentioned that the EU has already made significant strides toward limiting the harm by digital assets. She cited Facebook’s Libra as an example of the ECB’s involvement, saying that was “helpful to stop some of the players” from engaging with the industry.
She also noted that the EU has been partly successful in introducing regulations to the crypto markets. In particular, the ECB has announced Markets in Crypto Assets bill (MiCA), which addresses key crypto elements such as consumer protection, anti-money laundering (AML), environmental impact, and business accountability.
“At least Europe is ahead of the pack [in terms of regulation],” Lagarde said. “But as I said previously, it’s one step in the right direction. This is not it — there will have to be a MiCA II, which embraces broader what it aims to regulate and to supervise, and that is very much needed.”
The MiCA is currently making its way through the European Parliament and is awaiting final approval. As reported, the European Parliament economics committee passed the MiCA crypto regulation bill in October. Many expect the policy to go into effect starting in 2024.
The EU first reached an agreement on MiCA in July this year. Back then, representatives of the crypto industry, such as Rebecca Rettig, a board member at the crypto-friendly bank Silvergate, applauded the effort to “provide clarity in the crypto space” while also noting that there is “more work to be done.”
Earlier this month, European Parliament economics committee member Stefan Berger compared the collapse of FTX, once the third largest crypto platform in the world, to the fall of “Lehman Brothers” and the 2008 financial crises.
“The FTX/Alameda case has cost enormous trust. Such Lehman Brothers moments must be prevented in the crypto space. That’s exactly what MiCA is for. Crypto assets are not play money. Crypto asset service providers must ensure internal risk management mechanisms,” he said.
FTX announced that it had filed for Chapter 11 bankruptcy in Delaware, putting an end to the desperate attempt to raise funds. The collapse of FTX has also sent crypto prices into a free fall. Bitcoin has been trading around the $16,000 mark for the last couple of weeks, its lowest level in two years.
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