The liquidity problems encountered in recent weeks by the platforms of staking and cryptocurrency lending naturally caught the attention of regulators. President of the European Central Bank (ECB) and of the European Systemic Risk Board (ESRB), Christine Lagarde now wants to regulate these two activities, citing risks of financial instability. She therefore urged European Union regulators to take this into account in the second version of the MiCA regulations.
A necessary measure due to the rapid developments in the crypto sector
During her last intervention in the European Parliament, Ms Lagarde called on legislators to consider the risks associated with the practice of staking and cryptocurrency loans. In particular, she pointed out that it was time to regulate these activities given how quickly they have grown in the industry and recent events. ” MiCA II is expected to regulate crypto asset staking and lending activities, which are definitely on the rise “said the President of the ECB.
As a reminder, the European Union’s regulation on crypto assets (MiCA) should come into force by 2024. Rather than updating it, Ms. Lagarde would therefore like lawmakers to work now on a second framework that will take into account new developments in the cryptosphere. ” Innovations in these uncharted and uncharted areas put consumers at risk, where the lack of regulation often covers fraud, totally illegitimate valuation claims, and very often speculation and criminal operations. “, she warned.
DeFi and bitcoin are also affected
Ms. Lagarde took the opportunity to return to the risks associated with the development of DeFi, in particular the disruption of financial stability in the European Union. Although the sector is already subject to some oversight through MiCA regulations, this would be limited to financial intermediaries, according to the President of the ECB.
It therefore wishes to extend it to all players in the sector with a second regulatory framework. Finally, Ms. Lagarde also invited members of the European Parliament to include bitcoin in the same wave. “Bitcoin will not be covered by MiCA I, but I hope for MiCA II you will take this into account “, she said.
Christine Lagarde’s appeal comes a week after the platform staking and Celsius crypto lending froze withdrawals due to liquidity issues. The insolvency of the latter has revived the debate around the staggering interest rates practiced in the sector in order to attract the maximum number of investors. The regulation called for by the President of the ECB aims precisely to put an end to such practices and to strengthen the protection of investors.
Source : Fortune
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Luc Jose Adjinacou
Far from having dampened my enthusiasm, an unsuccessful investment in a cryptocurrency in 2017 only increased my enthusiasm. I therefore resolved to study and understand the blockchain and its many uses and to relay with my pen information relating to this ecosystem.
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