EC Wants Parliament To Adopt Crypto Rules To Protect Consumers

Mairead McGuinness, EU’s Commissioner for financial services, told members of the European Parliament (MEP) on Tuesday 14 that given the recent developments in the crypto space, passing the Markets in Crypto Assets (MiCA) regulation is urgent as these rules will be “the right tool to address the concerns about consumer protection, market integrity and financial stability.”

The EU Commissioner attended on Tuesday a session with MEP to explain the work undertaken by the Commission on financial markets, including the development of the capital markets union, anti-money laundering and sustainable finance. She also devoted part of her time to explain the economic sanctions imposed on Russia after the invasion of Ukraine. 

Next, Ms. McGuiness turned to crypto and the upcoming regulation with MiCA. The first point she made is to remind MEP that the EU sanctions apply to crypto, despite concerns that crypto could be used to circumvent them. The second point is that with strong rules applying to crypto assets, the implementation of these sanctions could be easier. “Of course, sanctions implementation could be facilitated if our framework on crypto was in place, and if all crypto-asset service providers were regulated entities and subject to effective supervision in the European Union,” she said in her remarks. 

The rest of her speech was dedicated to highlighting the risks for consumers who invest in crypto assets and how MiCA is necessary to regulate crypto assets and crypto asset service providers. She mentioned the recent collapse of TerraUSD and Celsius Network’s decision to pause transfers and withdrawals on Tuesday morning to justify a quick approval of new rules in this space. 

McGuiness was hopeful that the trilogue negotiations — the interinstitutional negotiations among the European Commission, the EU Parliament and Member States that were held on Tuesday afternoon after her remarks — could pave the way for a quick political compromise. There is some political pressure from all parties involved to get a compromise before the end of the French Presidency of the EU Council, which terminates at the end of June. Thus, her comments could suggest that a compromise is feasible in the next two weeks. The political compromise is not the end of the legislative road, as last-minute amendments can be introduced after the parties reach an agreement, but this agreement essentially provides the green light from all institutions to continue with a text that can be voted on. 

MEPs had the opportunity to ask the Commissioner about the crypto legislation, and Eero Heinaluoma of Finland asked her about the supervisory role of the European Securities and Markets Authority (ESMA) over crypto service providers. Heinalouma proposed that ESMA should directly supervise all crypto service providers and in the alternative, at least should directly supervise the biggest players. 

The Commissioner didn’t address the question directly, even though ESMA has been already suggested as the regulator to supervise most of the crypto asset providers, but other regulators like the European Banking Authority may have a role to play in supervising stablecoins of significant importance. 

“I am mindful that those investing in bitcoin or other [cryptocurrencies] don’t want to be part of the traditional financial system. Part of the attraction of investing in this world is that they feel that they won’t be subject to regulation — but given what we have experienced in the last weeks, it is very important that we regulate. There needs to be European supervision,” said Commissioner McGuiness in response to a question from a MEP.