Cryptocurrency regulations need to be implemented around the world. So said European Commissioner Mairead McGuinness, who said it’s great the European Union (EU) has become the first major jurisdiction to regulate crypto but that there is a need for the rest of the world to do so too, CoinDesk reported Thursday (Jan. 19).
“If we fail to do that global approach, we’re going to find that there’s more and more problems,” McGuinness told CoinDesk. “The technology is borderless.”
The Markets in Crypto-Assets (MiCA) regulation, which is set to be approved by the European Parliament in April, will not work if exchanges or providers of digital wallets are able to operate in unregulated areas and reach out to consumers in the EU, McGuinness said, per the report.
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The collapse of several major crypto firms in 2022 may help other jurisdictions see the need for regulations, McGuinness said: “We’re now, I think, in a good place because we have seen very visible examples of how things can go wrong.”
As PYMNTS reported Jan. 17, when it passes, MiCA will offer the first common licensing rules for crypto exchanges and wallets to do business in Europe, requiring platforms to receive a license from an EU financial supervisory authority.
The EU’s push to regulate crypto businesses comes as the industry is facing increased scrutiny in the wake of the collapse and alleged fraud at the FTX exchange.
In November, an EU official said that the MiCA regulations would have prevented FTX’s failures.
Speaking at a hearing of the European Parliament’s Committee on Monetary Affairs on Nov. 30, Alexandra Jour-Schroeder, the deputy director general of the European Commission’s financial stability unit, said that had the MiCA regulation been in force, “no companies providing crypto assets in the EU would have been allowed to be organized, [or] perhaps it’s better to say, disorganized, in the way FTX reportedly was.”
Since the collapse of FTX, calls for crypto regulation have grown louder in the U.S.
One of the most immediate and important failures in the FTX saga was the lack of “common sense internal controls,” Saule T. Omarova, a professor of law at Cornell University, told PYMNTS’ Karen Webster in an interview posted in November.
“We should have seen something like this coming because of the incredible speed with which this market has grown and the lack of any legal or regulatory compliance culture in this new sector, run by a lot of interesting [sic] personalities who are not necessarily part of the financial establishment,” Omarova said at the time.