As the European Union (EU) is preparing to fully implement the regulation of cryptoasset markets (Markets in Crypto-Assets, MiCA) As of December 2024, the European Cryptocurrency market is on the verge of a major change. Ian Hornehead of content at Money20/20 event in Amsterdamrecently spoke about how this new framework will affect exchanges and the market in general.
Clarity for cryptocurrency companies
Horne stressed that MiCA offers clarity to those who want to run regulated cryptocurrency businesses in Europe. “This indicates that companies are operating in an environment that wants them to exist,” he explained, describing MiCA as a positive step towards fostering a more structured cryptocurrency market. The regulation comes with requirements, including measures to prevent market manipulation such as front-running and money laundering, while strengthening consumer protection.
More responsibilities for exchanges
Horne detailed the increased responsibilities that cryptocurrency exchanges will face under MiCA. The regulation establishes stricter measures, including greater oversight of asset custody and liability for possible cyberattacks or code failures.
Exchanges will be required to provide daily reports on their holdings, while the “travel rule” will impose stricter verification for transactions over €1,000. “The regulation comes with some pretty significant requirements,” Horne said.
Balance between compliance and competition
Although MiCA’s goal is to ensure safer trading environments and prevent a repeat of recent pullbacks in the crypto market, Horne warned that its stricter rules could have downsides.
“It is possible that stricter requirements will make it more difficult for smaller cryptocurrency businesses to operate and could lead to some consolidation,” he said. Regulatory barriers to entry could also hinder innovation, potentially favoring big players with more resources to comply.
Gaps in MiCA regulation
Despite its broad reach, MiCA does not currently extend to DeFi protocols or NFTs, leaving room for experimentation in decentralized finance to continue. Horne suggested that the evolution of DeFi could still contribute to progress in regulated markets. As MiCA continues to roll out, the full impact of the regulation on the European market will depend on its implementation and any potential adjustments made.
The introduction of MiCA reflects a clear and cautious shift towards regulating Europe’s cryptocurrency market. Its goal is to ensure consumer protection without stifling growth. However, the balance between compliance and encouraging new business remains uncertain.
You can also read: Can Bitcoin surpass its all-time high? The key factors that are driving its price higher
Receive exclusive news 30 minutes before other traders
The 14 day free trial Benzinga Pro gives you access to exclusive news so you can trade before millions of other investors. Start your 14-day free trial by doing CLICK HERE.
For more updates on this topic, turn on notifications from Benzinga Spain or follow us on our social networks: x and Facebook.
Crypto Keynote USA
For the Latest Crypto News, Follow ©KeynoteUSA on Twitter Or Google News.