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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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