Crypto has enjoyed its journey without any strict regulation across the world. The recent changes in the value of the global crypto market and its increasing size have led to crypto regulation worldwide. Various states have imposed taxes and taken other measures to ensure that crypto remains in control of state authorities.
The recent calls for crypto regulation have come amid the faltering market as it has faced severe backlash because of the continuing losses. The biggest event in the market that shook its foundations was the collapse of a stablecoin, Terra UST. The mentioned change affected various coins in the market as the investors began to pull out their capital.
The recent changes in the global economy have led to speedy depreciation in the market value. It has concerned regulators worldwide because of the losses it might incur to the users. Here is a brief overview of the calls from EU regulators regarding crypto regulation.
The collapse of Terra UST and calls for crypto regulation
The collapse of Terra UST proved to be an event that shook the market, and similarly, it came as a shock to investors and regulators. Previously, investors had almost no fears about the collapse of a stablecoin. The recent event has caused fears, and the following situation led to an efflux of capital.
Verena Ross, the European Securities, and Markets Authority chair, has expressed her concerns regarding this issue as the investments might be risky for the investors. She opined that a formal legal framework would help protect investors’ capital across the bloc. She has expressed her impatience with this issue as it has already affected the investors greatly.
Ross expressed these views in an interview on Wednesday and expressed her strong support for crypto regulation using a formal legal framework. She said that investors are looking to crypto to increase their profits amid the ongoing inflation. Instead, the situation for crypto increases the risk for investors.
She said that they are monitoring the situation closely and would be looking for solutions to these problems. The changing situation has brought Bitcoin’s value a loss of 58%, while Ethereum has lowered its value by 62%.
Imbalance in the markets and the resulting changes
The imbalance in the situation has led to calls for crypto regulation from European Central Bank, which has called for tighter regulations. Though currently, various countries in Europe have applied local laws to crypto. Binance Holdings Ltd., a giant in crypto, sought regulations from the French government to pursue its activities. The same organization has plans for expansion as it is courting the German regulator.
If the European Union adopts a crypto regulation framework, the member countries would have to follow these. A common regulatory framework would help these countries adopt a joint strategy to tackle this issue. They have drafted a framework, the Markets in Crypto-Assets Regulation — or “MiCA,” which was proposed in September 2020 but hasn’t been pursued yet.
The European Parliament Council has plans to review it, and Ross believes that the mentioned crypto regulation framework will be implemented by 2023 or 2024. The skepticism regarding crypto has grown as various authority figures have expressed their distrust. A crypto regulation framework might help solve this issue as it would benefit all stakeholders.
Crypto’s risks to individuals have led to suspicions from regulators who want secure investments for citizens, thus leading to regulations. These regulations will help prevent happenings that affected crypto investors recently.
The constant decline of the global crypto market has led to calls for crypto regulation from European authorities. Verena Ross, the head of EU securities, called for a proper crypto regulation framework that would help secure investors’ funds. Though there is little chance that these regulations will be implemented soon, the initiation will help give hope.