As the digital asset industry has been gaining more traction, regulators have started to uphold the importance of monitoring it. Each government has been working towards enforcing its own set of laws. While some are in favor of the industry, a few of them hinder the growth of the crypto market. The European Union [EU] has been following its own set of laws, however, the Markets in Crypto-Assets [MiCA] regulation is expected to change a lot of things for the digital asset market in the region. As this comes to fruition, the EU was hit with criticism for its current laws.
According to the European Central Bank’s [ECB] annual report, given the disparity in regional crypto regulations, Euro-area banks’ bids for crypto licenses need to be more uniform. The agency intends to impose added supervision over a disjointed system since a lot of licensing requests are coming from advanced institutions.
Elaborating on the same, the ECB wrote,
“National frameworks governing crypto-assets vary quite significantly. The ECB is taking steps to harmonize the assessment of licensing requests involving crypto-assets.”
Most crypto bank applications come from Germany
Furthermore, a lot of applications for crypto banks came from Germany, while one came from Luxembourg. ECB notes that the ones coming from Germany were due to legal limitations in the region. Additionally, national regulators like Germany’s BaFin are in charge of keeping an eye on smaller banks located inside their border. However, the ECB has the final say on whether to issue or revoke a license.
MiCA was first suggested in 2020 and is currently under development. Nonetheless, the European Parliament will hold a final discussion on it on April 18. This regulatory measure is expected to maintain financial stability and promote improved innovation while guarding crypto investors. As mentioned earlier, the implementation of this law will bring about changes in the EU crypto market.