ECB calls for regulatory expansion in crypto bill

European Central Bank (ECB) President Christine Lagarde called for more regulations on cryptocurrency after the collapse of the exchange FTX and cast doubt on the broader digital asset market.

At the hearing on November 28 of the Committee on Economic and Monetary Affairs of the European Parliament, President Christine Lagarde cited the case against the project stablecoins Libra (Diem's first name) was developed by Facebook as an example of market participation crypto from the ECB, this is a “helpful” action to prevent some of the major players from having a negative impact on the industry.

However, Ms. Christine Lagarde said about the situation of FTX, related to assets cryptocurrency generally opposed to stablecoins, favors exchange stability and reliability, and the ECB needs to step up its role as a global regulator to address people's growing concern about this risk.

“At least Europe is leading the way towards crypto regulation. But like I said before, it was a step in the right direction. There will have to be MiCA II, which is broader than what the bill currently has for regulatory and oversight purposes, and that is much needed.”

Introductory statement by President Christine @Lagarde at the hearing of the Committee on Economic and Monetary Affairs of the European Parliament https://t.co/GKnkOJHh9p

November 28, 2022

The “Markets in Crypto Asset Industry” (MiCA) bill is essentially a pivotal bill that creates a common regulatory framework for cryptocurrency adoption in Europe. In fact, MiCA is waiting for the final approval step after legal and linguistic checks by EU lawmakers.

The European Parliament's Economic Commission adopted the MiCA framework in October 2022 following experimental negotiations between the European Council, the European Commission and the European Parliament. Many expect the policy to go into effect starting in 2024.

However, the point of particular note is that Christine Lagarde was referring to MiCA II, presumably developing additional legislation based on work that lawmakers did on the original bill in June 2022. . At the time, the ECB President said the bill should regulate staking activities, crypto lending and even all those activities. DeFi when first voicing opposition to these arrays through a series of studies.

In addition, a key member in developing the regulatory framework for MiCA, of the Economic Committee of the European Parliament, Mr. Stefan Berger also cited the collapse of FTX on November 9 as follows:

“The case of FTX clearly shows the dangers that a completely unregulated crypto market and unlicensed exchanges entail. We still have a large number of crypto service providers whose concepts cannot be understood. MiCA solves exactly this problem. With MiCA, incidents like FTX won't happen."

However, the ECB is also currently conducting a two-year investigation into the digital euro project (CBDC), explore the use of online payments authenticated by third parties. Some officials in the EU expect to see legislation regarding a digital euro in 2023.