At issue is crypto’s existential question: Is it an asset or is it money?
There’s always a game of thrones happening in the EU — even when it comes to crypto.
Legislators in Brussels are divided over which financial regulator
should take the lead when it comes to supervising crypto companies. And
if disagreement turns into political deadlock and fails to produce clear
rules, it’s the average citizens investing in crypto who’ll suffer.
The division lies between EU governments in the Council and the
European Parliament. Negotiators from the two institutions will soon
convene to finalize a bill that aims to regulate the EU’s markets in
crypto assets, dubbed MiCA, which was proposed 18 months ago.
The Council is adamant that the title of crypto watchdog should go to
the European Banking Authority (EBA). The Parliament, meanwhile, is
convinced the European Securities and Markets Authority (ESMA) is best
suited for the job.
The winner will police the biggest players in the marketplace and
charge them for the pleasure of supervision. The sector’s new sheriff
will also be able to fine misbehaving companies and oversee a
neighborhood watch of national authorities to ensure no one tries to
dodge MiCA’s new transparency measures and investor safeguards.
Just two months ago, EU policymakers would have seen MiCA as an
essential tool to check tech giants, such as Facebook's parent company
Meta, as they seek to issue cryptocurrencies unchecked for billions of
social media users — a scenario that could ultimately undermine national
money. That threat diminished in January, after Facebook and its
partners abandoned plans to issue their own digital currency, called Diem.
But that news did little to dampen broader interest in
cryptocurrencies, whose popularity has skyrocketed over the pandemic
into a trillion-dollar market.
And without the necessary transparency checks and safeguards in place,
these hobby investors could lose everything to market swings, false
promises and scams.
“Consumers face the very real possibility of losing all their
invested money if they buy these assets,” the EU’s three regulators for
banks, securities and insurance said Thursday in their latest market warning. “Consumers should be particularly wary of promised fast or high returns, especially those that look too good to be true.”...
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