Crypto regulations in the EU Lean Toward Investor Protection, Away From Privacy
EU regulation will give cryptocurrency credibility, but affect privacy and decentralization.
New EU rules on cryptocurrencies, likely to be approved by the European Parliament on Monday, could support a stable environment for investors, but at the cost of alienating fans of privacy and decentralization.
The Regulation on Markets in Crypto-Assets (MiCA) was approved by the European Council on 5 October. The Council consists of the heads of state or government of the EU, while the Parliament is an elected legislature.
From an investor protection angle, the package – which the council said in June had been provisionally approved by parliament – would make providers of crypto-assets responsible for protecting consumers’ wallets. The providers, which include exchanges and custodians, will be liable if they lose the investors’ assets. This is no small claim, considering the number of hacks exchanges and other crypto firms have experienced in recent years. Binance, the world’s largest crypto exchange, reported that $100 million was stolen on October 6, and according to Compritech’s “Crypto Heist Tracker,” more than $5 billion has been stolen from crypto firms in the past two years alone.
Separate legislation would require wallet providers to report information about payers and payees in crypto transfers of any size, making them subject to what is known as the travel rule.
“No minimum transaction limits to which the travel rule will apply, as well as the rule’s application to interactions with self-hosted wallets will undoubtedly be seen as an invasion of financial privacy by the most die-hard crypto enthusiasts,” Anto Paroian , CEO of ARK36 cryptocurrency hedge fund, told Forbes in an email.
Stablecoins will be subject to strict regulations, including supervision by the European Banking Authority and a requirement that issuers have a presence in the EU. This is likely a reaction to the collapse of Terra
Overall, Duke continued, “MiCA coming into effect in 2024 offers an apparently pragmatic and sensible regulation that shows that the process of inviting input from the crypto community has worked.”
