European authorities want automated software to monitor DeFi activity on the Ethereum Blockchain
The The European CommissionThe European Union’s executive branch that proposes legislation and implements decisions is digging deeper into decentralized finance (DeFi) — and wants to study Ethereum (ETH) data to do so.
The Commission has submitted a document which it seeks, which it says,
“A pilot project to develop, deploy and test a technological solution for embedded monitoring of [DeFi] Activity.”
The document doesn’t provide many details, but it goes on to explain that the project will involve data on Ethereum.
Called the “Decentralized Finance Embedded Oversight Study”,
“The project will seek to take advantage of the open nature of transaction data on the Ethereum blockchain, which is the largest settlement platform for DeFi protocols. The main focus will be on automated supervisory data collection directly from the blockchain to test the technological capabilities for supervisory monitoring of real-time DeFi activity .”
According to the document, this project is linked to a program financed by EU funds. Estimated total value is €250,000 ($242,800).
The inquiry deadline is 24 November, while the deadline for receiving offers or requests to participate is 1 December.
Patrick Hansen, director of EU strategy and policy at the fintech company and USD coin (USDC) stablecoin issuer Circle, tired that this move could be “quite impactful” – and it could affect the role of certain market participants, such as decentralized autonomous organizations (DAOs).
Crypto legislation passes the European Parliament
That said, it’s unlikely to come as a surprise to anyone in the crypto world that regulators are pushing deeper into every aspect of the industry. Ever since the collapse of the Terra/LUNA ecosystem, the market crash this year, as well as the following series of bankruptcies, regulators around the world have sharpened their already growing focus on the industry.
In the EU in particular, another big event happened this week: after two years of discussions, the EU passed landmark crypto legislation European Parliament.
The full text of the so-called Markets in Crypto Assets Regulation (MiCA) was approved last week. The bill aims to regulate all crypto-related activities, and in particular the issuance of cryptocurrencies, that take place within the European Union, while also aiming to bring much stricter oversight to companies defined as so-called providers of crypto-active services. (CASPs).
Notably, the new regulations do not include a ban on mining (PoW) that was originally proposed.
The next step will be to translate the entire text into the more than 20 official languages of the EU. The bill includes an adaptation period of 12-18 months to help companies adapt to the new regulations.
According to mayor Stefan Berger from the Group of the European People’s Party (EPP Group; a centre-right group in the European Parliament),
“Currently, there are more than 10,000 cryptoassets with a total cryptocurrency market cap that recently reached $1 trillion. Furthermore, analysis shows that up to 10% of global GDP could be tokenized and stored on blockchains by 2025. The goal of Europe’s [MiCA] is to bring order to the wild west of the cryptosphere.”
In a comment shared with Cryptonews.comBerger argued that with MiCA, the EU is “a pioneer” that will set global standards for other countries, while Europeans can benefit from secure transactions and increased transparency.
EU lawmakers also worked to reach an agreement on the Transfer of Funds Regulation (TFR), which EPP group shadow mayor Lidia Pereira and Lukas Mandl claimed would help the fight against money laundering, saying:
“We are strengthening our anti-money laundering (AML) legal framework while preserving the competitiveness of our market and supporting an innovation-friendly environment. The EPP was clear from the beginning: it is important to have crypto assets covered by the TFR, but such a decision must be proportionate and cannot result in a stigma on the crypto industry.”
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Learn more:
– European regulator lists what is needed for ‘Responsible crypto sector’
– “More work to do” as EU imposes strict new crypto regulations
– EU regulation could hurt small crypto players, Stablecoin users and Elon Musk
– EU legislators want anti-money laundering rules to cover NFTs
