EU cryptor framework after FTX collapse from political decision-makers

EU politicians have expressed doubts as to whether the new cryptocurrency regulations of the block are robust enough to prevent the collapse of FTX, whose bankruptcy has sent shock waves by the digital asset.

During a hearing from the European Parliament's Economic and Monetary Committee on Wednesday, the MPs asked whether the groundbreaking crypto framework of the EU, Markets in Crypto-Assets (Mica), which would come into force in 2024, could stop collecting the FTX equivalent.

"I have serious doubts that Mica would have prevented what happened. Aurore Lalucq, a French MEP, who previously criticized some of the European approaches to digital assets, said that she wants Europe's legislator to "wake up".

The hearing was called in November in response to FTX's bankruptcy, which shaken an industry that has already been shaken by the Markt Crash this summer. The collapse of FTX, which was based on the Bahamas, triggered criticism of the supervisory authorities of the island state. The fallout of the former crypto trading house has also spread to Cyprus.

The European Footprint of FTX, which was left by the Cypriot subsidiary, whose license has now been suspended, has annoyed the legislator, which fears that the national authorities may not have grown to the task of regulating the battered industry.

Markus Ferber, a German Member of the Member, said that it was “worrying that FTX has managed to receive a license for an investment company in Cyprus. If [this subsidiary] is only approximately how his parent company behaves, this raises great questions regarding the quality of financial services in Cyprus”.

mica was regarded as a turning point for crypto regulation, as it is an attempt to enforce EU-wide standards instead of pursuing competing national approaches.

According to the legislation, crypto companies would have to be approved by an EU member state of an EU member state so that the company can offer its services throughout the block. The national regulatory authorities would in turn exchange information with the European securities and market supervisory authority.

The hearing takes place when civil servants from the European Central Bank said that Bitcoin was unsuitable both as a payment method and as an investment instrument, in an unusually energetic rejection of the digital currency.

The recent stabilization of the Bitcoin value at "around $ 20,000"-after its maximum of around $ 69,000 in 2021-was a "artificially brought-out breath before the way to insignificance", wrote Ulrich Bindseil and Jürgen Schaaf on Wednesday in an ECB blog contribution and leaned that the digital currency recovered dignity.

The central bankers argued that Bitcoin was "questionable" as a means of payment because of its "conceptual design and its technological defects", which made its transactions "cumbersome, slow and expensive". They asked the regulatory authorities to give the digital currency no legitimacy in the name of the innovation.

"Bitcoin has never been used to a significant extent for legal transactions in the real world," they wrote. The binding rope and Schaaf also said that the cryptocurrency was "not suitable as an investment", and added that their market evaluation "is based on pure speculation".

"It does not generate cash flow (such as real estate) or dividends (such as stocks), cannot be used productively (such as raw materials) or social advantages (such as gold)," they wrote.

The contribution also met the regulatory authorities and said that the current framework conditions were shaped by misunderstandings, including the conviction that innovation should be encouraged at all costs.

"Since Bitcoin does not seem to be suitable as a payment system or as a form of investment, it should neither be treated nor legitimized regulatory," they said.