“Crypto-assets are not play money”
European Parliament Economy Committee member Stefan Berger has compared the current situation with FTX to the 2008 financial crisis, using “such Lehman Brothers moments” to justify the need to regulate crypto.
In a tweet on Nov. 9, Berger so proper regulation was needed to avoid problems that “cost enormous trust” in the crypto space, amid FTX reporting financial difficulties. The parliamentary committee member pointed to the Markets in Crypto-Assets, or MiCA, framework currently moving through the European Council as a way to require crypto firms to “ensure internal risk management mechanisms.”
Shame! The #FTX/#Alameda The matter has cost enormous trust. Such Lehman Brothers moments must be prevented in the crypto space. That’s exactly it #MiCA is for. Crypto-funds are not play money. Service providers of cryptoassets must ensure internal risk management mechanisms. https://t.co/zNrB8CdUbU
— Stefan Berger (@DrStefanBerger) 9 November 2022
“The FTX case makes clear the dangers of a completely unregulated crypto market and unlicensed crypto exchanges,” Berger said in a written statement to Cointelegraph. “We still have a large number of crypto asset service providers whose concept is not understandable. MiCA addresses exactly this problem. With a global MiCA, the FTX crash would not have happened.”
He added:
“The crypto space is not a casino. The crash of a $30 billion exchange like FTX has unsettled the entire market […] Regulation is a good tool to restore confidence in the ailing market.”
Berger’s statement of “disgrace” to FTX and Alameda Research came before crypto exchange Binance announced on November 9 that it did not intend to acquire the firm. Both Binance CEO Changpeng Zhao and FTX CEO Sam Bankman-Fried publicly came out in support of an agreement between the two major exchanges on November 8 in an effort to address FTX’s reported “liquidity crisis.” The ongoing situation with FTX has led to volatility across the crypto market and some lawmakers calling for regulatory clarity.
Related: Why is the crypto market down today?
On 10 October, the European Parliament’s Economic Committee accepted the MiCA legislation, the result of trilogue negotiations between the EU Council, the European Commission and the European Parliament. The bill aims to create a consistent regulatory framework for cryptocurrencies among the 27 EU countries. EU legislators still need to carry out legal and linguistic checks, approve a final version of the bill and publish MiCA in the EU Journal, but the policy could come into force as early as 2024.
