Good day everybody,
Welcome to CryptoGod-1's blog on all things crypto. Today I am going to do a quite write up regarding a recent article I saw, made about creating a “responsible” crypto sector according to Jose Manuel Campa, chairperson of the European Banking Authority (EBA). I will highlight some of the key points made on how Europe is looking at implementing and creating a regulation for the Crypto industry.
European Banking Authority (EBA)
The European Banking Authority is a regulatory agency of the European Union, which currently consists of 27 countries. It operates an internal (or single) market which allows free movement of goods, capital, services and people between member states. The goal of the EBA in terms of Crypto is to create a single rulebook for its member states to adhere to in respects of banking through the adoption of binding technical standards and guidelines. Along with the European Council, they have completed their negotiations on a proposal by the European Commission to regulate markets in cryptoassets, which are referred to as MiCA.
Chairperson of the EBA, Jose Manuel Campa, has argued against this. He believes more dialogue is required between the crypto industry itself and those looking to supervise and regulate it, along with a higher level of consumer education, “rigorous compliance,” and even a “mind shift” for some crypto firms.
He went even further, arguing that:
“Concluding negotiations on MiCA should be seen as the beginning, not the end, of the work to foster the emergence of responsible cryptoasset products and services in the EU.”
With 2023 expected to see MiCA come into force, it would be a “ground-breaking legislation” that will create an EU regulatory framework for all levels of crypto, including stablecoins, cryptoasset services, and the custody of coins which will include how exchanges work. Campa also noted that:
“As authorities deepen their capabilities and apply the new perimeter of regulation, an uptick in enforcement actions can be expected to stamp out unlawful or unscrupulous practices in the cryptoasset market. This action should be welcomed not only to protect consumers, but to address practices that tarnish perceptions of legitimate uses of the technologies across the financial sector.”
How to make Crypto a Safe, Responsible, and Legitimate Space
The industry is capable, and in all honesty needs to, create a climate in which "responsible cryptoasset products and services can emerge at scale.” This can only be achieved if there is real communication and dialogue between industry and regulators, according to Campa, which would create:
- a common and pre-emptive understanding of opportunities and risks,
- an understanding of supervisory expectations.
Along with the necessity to find and potentially remove and obstacles or potential gaps to create and facilitate responsible innovation, there is also a requirement and responsibility to provide consumer financial education initiatives, as consumers need to be equipped with the skills necessary for them to understand the features of crypto products and services. The standards behind what crypto can offer is another area which the EBA feels needs improving.
Crypto Firms vs Legislators
Many firms which are active in the Crypto space will require major adjustments to meet the new standards which will be set out in tMiCA. Campa noted that:
“For some firms, the adjustments will need to go beyond systems and controls, and will entail a complete shift in mindset toward a ‘compliance by design’ approach.”
In regards to the legislators, they will require a real push in terms of strengthening their capabilities to monitor the crypto market. These need to cover new distribution and marketing channels and “emerging interconnections” between crypto and traditional finance (TradFi). As noted by Campa in advance of MiCA next year:
“Many supervisors are already accelerating investments in new data analytics and training for staff,”
Role of the European Banking Authority (EBA)
With MiCA just around the corner, the EBA will be responsible for the new supervision system that will be responsible for “the largest asset-referenced and e-money tokens [stablecoins].”
The will play a major role in ensuring responsible uses of cryptoasset applications in the EU from 2023. MiCA will deliver an extensive number of technical standards and guidelines mandates under its codes, along with those of the Transfer of Funds Regulation (TFR).
The EBA will continue with its EU-wide role of monitoring and assessment of emerging cryptoassets along with their use cases, promoting knowledge exchange between industry and supervisors at all levels, promoting supervisory merging at the national level, and continue working with international standard-setters to ensure crypto is regulated but allowed the freedom to develop within the European Union.
Campa finished by stating:
“I am confident that responsible and sustainable innovation in the crypto sector can provide benefits for EU citizens in the years to come, but it will also require strong, consistent regulation, and a rigorous compliance culture.”
I hope you enjoyed the article and found it interesting to see the developments down the line for crypto in the European Union.
Have a great day.
CryptoGod-1.
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