Verena Ross calls for urgent regulation of cryptocurrency

223
2
Verena Ross calls for urgent regulation of cryptocurrency

Verena Ross, Chair of the European Securities and Markets Authority ESMA, has called for the urgent regulation of the space.

In an interview on May 25, Ross said she is eager to wait for lawmakers to pass the EU's blueprint for cryptocurrency regulation into law. She believes that rising inflation will cause retail investors to invest funds into risky cryptos while trying to compensate for inflation and bring greater returns, which could lead to greater risk-taking.

The EU has national regulators that handle the industry based on local laws. Each country has a different approach to regulating the nascent asset class.

Ross focused on the need for a common regulatory framework in the EU, and he focused on the exchanges, saying:

There is an imbalance between how national supervisors deal with these entities and how they judge them because there is no EU regulatory framework for these kinds of entities at the moment. A common regulatory framework will help with that. Despite repeated calls for regulation, the MiCA draft is still under consideration despite repeated calls for regulation.

The EU wants to standardize the Markets in Crypto-Assets Regulation MiCA with a draft framework proposed in September 2020. The road to implementation of MiCA has been long. The draft is currently being examined by the European Parliament and Council.

Despite this progress, Ross hopes the European Parliament and Council will finalize the review process in the next few months and pass MiCA into law in either 2023 or 2024.

The President of the European Central Bank, Christine Lagarde, also called for a regulation of the digital currency. She said that cryptocurrencies are worth nothing. Francois Villeroy de Galhau, a Governing Council member, has bashed the space, expressing its promises and rewards are an illusion.

The ECB expressed concerns about the full-scale connection between the industry and the traditional finance sector. In a Financial Stability Review, the regulator highlighted how cryptocurrencies withstood a €1.3 trillion $1.39 trillion market loss without financial stability risks.

The ECB stated that the market for cryptocurrencies is gravitating towards a point where unbacked assets will risk financial stability.