The European Central Bank (ECB) is expected to issue a strong warning to eurozone countries around the pressing need to harmonise regulation across the crypto industry, the FT reports.
Last week the European Commission passed a landmark regulation, Markets in Crypto-Assets (MiCA), to set standards across the crypto space, however the ECB remains concerned about a potential patchwork of national regulations emerging in the coming months - particularly as full implementation is set for 18 months after becoming law in 2023.
Under MiCA, the regulatory framework will protect investors and consumers, while ensuring financial stability and enabling innovation and growth. The regulations will help protect consumers from fraud and scams, as crypto-asset service providers will be liable if they lose assets and fail to protect investors’ wallets.
Commenting on the impending warning, Richard Gardner, CEO of Modulus, states: “It makes sense that the ECB would want to prevent a collection of national laws on cryptocurrencies. For one thing, it could lead to operators shopping for favourable jurisdictions. Beyond that, it will create confusion for multinational operators, and it could create an uneven playing field within the EU. On the other hand, MiCA is so very far away. That it has come so far is a positive sign. However, eighteen months is an eternity in the crypto space.”
“Now that banks and institutional money is in play, there are immediate needs. Financial institutions need to understand what they can do and how they can safely and legally participate. When you talk about institutional money, you could be talking about people’s pensions and retirements. What happens when a hack takes out hundreds of millions in assets overnight? Those are questions that require answers, and I don’t think, in many cases, that some countries will be willing to wait eighteen months to get them. Nor do I think you can blame them for wanting action,” said Gardner.