As a researcher with experience in the European Union’s crypto regulatory landscape, I find it concerning that the EU’s flagship crypto legislation, MiCA, is supposed to take effect this year but pre-existing legislation has not been enforced evenly. This is according to Jon Helgi Egilsson, the chair and founder of Monerium, a licensed e-money issuer operating in the region.
As a researcher studying the European Union’s regulatory landscape for cryptocurrencies, I’ve noticed that while the EU passed its flagship crypto legislation in 2023, the enforcement of pre-existing regulations in this area has varied significantly across member states.
According to Jon Helgi Egilsson, who is both the chairman and founder of Monerium, a licensed electronic money issuer based in the given region.
Based on Egilsson’s perspective, the MiCA regulations, which are the European Union’s latest rules for crypto assets, are constructed with a foundation similar to the Electronic Money Directive II (EMD II). This directive has been disregarded for an extended period.
Egilsson showed disappointment over the overall implementation of regulations and its effects on electronic money businesses in that particular area.
As a researcher studying the regulations of electronic money transactions, I can tell you that if you choose to provide e-money services, it’s essential to obtain a license as an e-money institution. Failure to do so may result in penalties and even imprisonment.
Based on my analysis of the given information, this is how I interpret the situation according to Egilsson’s perspective. However, it’s important to note that not all individuals are subjected to the same degree of scrutiny as Egilsson.
“We are competing with companies both in Europe and outside of Europe, which are doing similar things, but they haven’t received any license.”
Although obtaining a license may alleviate certain concerns for e-money issuers, it could also introduce new complications in various aspects.
As a researcher studying regulatory compliance for licensed entities, I’ve discovered that there are significant restrictions on what we can do in terms of promotion and solicitation. We are required to submit regular reports to the regulators, who have the power to disapprove of our actions if they deem them non-compliant.
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As an analyst, I can tell you that obtaining a license to become an issuer comes with significant administrative burden and financial expenses.
Although Monerium is subject to rigorous regulatory oversight, the same is not true for other types of money, such as stablecoins.
“It’s astonishing to me that regulators have permitted this to continue for so long,” expressed Egilsson with evident displeasure.
A disparity in enforcement
CryptoMoon held a conversation with Natalia Latka, the policy director and regulatory affairs expert at Merkle Science, to gain insights into the reasons behind the varying degrees of enforcement in the cryptocurrency sector.
As a researcher studying the regulatory landscape of electronic money tokens (EMTs) or stablecoins within the European Union, I’ve discovered that there exist two principal perspectives on how these digital assets should be regulated.
The first school of thought focuses on the predominance of the Electronic Money Directive.
In simpler terms, MiCA (Markets in Crypto Assets) regulation builds upon the foundation set by the earlier Economic Modernization Directive (EMD) for crypto markets. The EMD’s rules were already applied to Electronic Money Tokens (EMTs) before MiCA was passed, making it an enhancement rather than a new set of regulations.
As a researcher examining the regulatory framework for e-money tokens, I’ve come across Latka’s perspective that these tokens fall under the scope of electronic money as outlined in Article 48(2) of MiCA. This provision explicitly states that e-money tokens should be regarded as electronic money, thereby affirming the applicability of the Electronic Money Directive (EMD) to E-Money Tokens (EMTs).
As a analyst, I’ve come across an opposing perspective within the EU that may have influenced regulatory decision-making.
MiCA is king
The second school of thought believes MiCA is the primary legislation for stablecoins or EMTs.
As a crypto investor, I’ve noticed a distinct contrast between EMTs (Electronic Monetary Systems) and traditional electronic money. The proponents of this perspective highlight these substantial distinctions.
From the perspective of regulators, stablecoins introduce new risks that aren’t found in traditional electronic money. One example of these risks is the systematic risk linked to self-custodial digital wallets.
A new potential risk has surfaced regarding global stablecoins, which could develop into systemic threats. The European Commission deemed the existing regulatory framework, as set by the EMD, insufficient to address these underlying risks.
Latka pointed out that although the commission had the power to control e-money tokens under the Electronic Money Directive (EMD), this possibility was considered but discarded. Instead, they opted to establish a customized regulatory framework that operates alongside the EMD to cover any regulatory loopholes thoroughly.
For industry specialists like Egilsson, the challenge lies in the fact that despite the new regulatory framework being deliberated, argued, passed, and implemented, there has been a lack of uniformity in its application.
Given the issues Egilsson raised, CryptoMoon asked if MiCA would make a difference.
“I sincerely believe they will enforce it,” Egilsson said.
An open question
As a crypto investor, I’m keeping a close eye on the regulatory landscape, particularly regarding stablecoins and e-money. With MiCA (Markets in Crypto-Assets) set to be fully enforced by late 2024, there’s growing optimism from industry experts like Egilsson that this will bring clarity to the legal debate surrounding these digital assets. However, I remain cautious and understand that this is just one piece of the regulatory puzzle. The crypto market is known for its dynamic nature, so it’s essential for investors like myself to stay informed and adapt accordingly.
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Yet, MiCA signifies the next stage in an evolving dialogue. A substantial amount of intricacy remains to be addressed, potentially requiring extensive time for resolution.
“Latka expressed that the EU needs to offer clear instructions on this ongoing debate, as the sector requires more clarification, particularly concerning how MiCA aligns with existing European financial rules. A thorough understanding of MiCA’s interaction with other financial legislation is crucial, along with a plan for addressing any potential conflicts or overlaps.”
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2024-05-07 18:58