Commissioner for financial services, financial stability and capital markets union of the European Commission Mairead McGuiness calls for a global approach to regulating cryptocurrencies. She urged global regulators to work together in addressing the potential risks of the crypto market.
McGuiness made her views public in an opinion piece published on The Hill on May 5 citing the need for a global approach in dealing with digital assets.
‘We should not underestimate the significant risks that crypto poses. We need not look too far into the past to see the harm that financial innovation can cause without the right regulation and supervision in place,’ she said in the opinion piece.
‘With unregulated crypto, consumers run the risk of buying into unsuitable products, relying on incomplete information. Investors risk losing money because of fraud, deception or simply the volatility that has characterized crypto markets since their inception,’ she added.
She also emphasized the importance of the European Union working alongside the United States to lead the world in a regulatory approach for cryptocurrency.
‘I believe that the EU and the U.S. can together lead the way on a shared international approach to regulating crypto,’ McGuiness said.
‘Together, we can enable innovation in finance, while protecting consumers and maintaining financial stability,’ she added.
The European Union has already moved forward with providing a framework for crypto regulations within the region. According to McGuiness, the Markets in Crypto Assets (MiCA) proposal is one of the first movements to create a comprehensive regulatory framework.
‘MiCA promotes responsible innovation, provides legal certainty and addresses the risks to financial stability, consumers and market integrity,’ she said.
The proposal standardizes all the rules for crypto service providers within the countries that are under the European Union.
However, she argued that to fully make crypto rules effective, global coordination rooted in joint international principles is a must.
‘A global agreement on crypto should first enshrine that no product remains unregulated. Second, supervisors should collect and exchange information globally. Third, any agreement must protect retail investors. Fourth, the crypto ecosystem should fully integrate environmental considerations,’ she reiterated in her statement.
On the other hand, crypto business leaders have asked the European Union to ease regulations and dial down attempts to heel the rapidly growing decentralised finance (DeFi) platforms.
In a report by Reuters, a total of 40 crypto leaders sent a letter to 27 EU finance ministers last April to request that regulations did not go beyond rules that are already applied by the Financial Action Task Force (FATF).
The letter said that the MiCA proposal will put digital asset owners at risk especially if information such as transaction details and wallet addresses are publicly disclosed. Moreover, it has requested that the EU should exclude decentralised projects and that certain stablecoins should not be subjected to the proposed regulation.
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