Christine Lagarde, President of the European Central Bank (ECB), made a speech the other day. In the speech, he pointed to the FTX crisis and regulations in the space regarding Bitcoin and altcoins. Here are the details…
ECB President signals ‘MICA II’ for Bitcoin and altcoins
cryptocoin.com As we have also reported, yesterday at 17:00 Turkish time, the President of the European Central Bank (ECB) Christine Lagarde made a speech. In her speech, she also touched on cryptocurrencies. After the collapse of cryptocurrency exchange FTX, Lagarde once again said that regulation and supervision of crypto is an “absolute necessity” for the EU. At the hearing of the European Parliament’s Committee on Economic and Monetary Affairs on Nov. 28, Lagarde cited Facebook’s Libra as an example of the ECB’s “blocking some players from engaging with crypto companies.”
However, he noted that the situation with FTX, which relates to crypto assets as opposed to stablecoins, is more about the “stability and reliability” of the exchange. He said the ECB needs to step up as a global regulator to address people’s growing interest in crypto. The head of the ECB used the following statements:
At least it’s on the way to European crypto regulation. But as I said before, this is a step in the right direction. Not all. There will need to be a MiCA II that more broadly embraces what it aims to regulate and oversee, and it is much needed.
MiCA is awaiting approval
The Crypto Asset Markets law, or MiCA, awaits final approval after legal and linguistic checks by EU lawmakers. The European Parliament’s economic committee adopted the MiCA framework in October, following tripartite negotiations between the European Council, the European Commission and the European Parliament. Many expect the policy to take effect from 2024.
Lagarde referred to MiCA II in June. The head of the ECB at the time said that the framework “definitely needs to regulate crypto-asset staking and lending activities.” Stefan Berger, a member of the European Parliament economics committee, one of the proponents of the MiCA framework, also pointed to the decline of FTX while advocating for crypto regulation on Nov. Berger used the following statements:
The FTX case makes clear what dangers a completely unregulated crypto market and unlicensed crypto exchanges entail. We have a large number of crypto-asset service providers whose concept is still not understood. MiCA will fix exactly this problem. There would be no FTX crisis with a global MiCA.
Which cryptocurrencies does MiCA affect?
MiCA is expected to go into effect in 2024. Under the proposed new law, only euro-pegged and fully 1:1 backed assets are allowed. This basically makes algorithmic stablecoins and anything pegged to anything else illegal. In addition, the bill introduces a fixed limit of 200 million euros for the daily trading volume. Also, some of the major non-euro pegged stablecoins that MiCA is addressing are as follows:
Also, interest in cryptocurrency exchanges increased due to the FTX collapse. Therefore, cryptocurrencies such as FTX’s FTT, Huobi’s HT token, Binance’s BNB coin may be in the focus of regulators.
This is a much lower figure than most markets trade. MiCA limits both the innovation and competitive potential of European crypto companies here. The ECB is currently conducting the two-year research phase of the digital euro project investigating the use of third-party verified online payments. Some authorities in the EU expect to see legislation on the digital euro in 2023.
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