The FTX collapse took the finance world by storm, both crypto and otherwise. The second largest cryptocurrency exchange was trusted and believed to be robust. No one expected the Bahamas-based firm to be as ill-managed as it turned out. The contagion from the collapse continues to impact the market. A complete analysis of the damage will take due time. This Wednesday, the Economic Affairs Committee of the European Parliament will hold a hearing on the FTX collapse.
Nonetheless, European authorities seem to have had their doubts before the situation unfolded.
Luis de Guindos, vice president of the European Central Bank, told reporters earlier this month that the decline of FTX was “not a surprise.” According to Guindos, the exchange’s dissolution did not have a significant impact on the larger financial markets.
FTX customers were dispersed over the globe. However, the majority of users were in non-EU nations, according to cryptocurrency data aggregator CoinGecko. The company named South Korea, Singapore, and Japan as the top three nations for website traffic to FTX. The 30-country list from CoinGecko only included Germany (ranked fifth), France, Italy, the Netherlands, and Italy.
Can the MiCA protect Europe from an FTX-like collapse?
Markets in Crypto assets (MiCA), the EU’s impending crypto legislation, is said to prevent scandals on the scale of the FTX. Additionally, Stefan Berger, the center-right MEP who guided MiCA through Parliament, stated that MiCA should “be taken as a global model” for cryptocurrency regulation. However, some do not share the same sentiment. Some lawmakers argued that, even after it is implemented, MiCA may already require a modification in light of the catastrophe.
Europe is one of the first regions to adopt a comprehensive legal framework for cryptocurrency assets and service providers. Moreover, The General Data Protection Regulation and the proposed artificial intelligence law are two instances of how the EU views itself as a pioneer in regulating emerging technology.
The MiCA legislation is likely to be implemented by June 2023.