FRANKFURT (Reuters) – The European Union’s proposed regulations for crypto assets do not go far enough, and safeguards need to be strengthened to capture risks adequately, European Central Bank supervisory board member Elizabeth McCaul said on Wednesday.
The European Parliament is set to vote on the Markets in Crypto-assets (MiCA) bill later this month, taking a big step in providing oversight of the crypto world after a series of scandals and collapses.
“While the new Basel standard and MiCA are important milestones, I am afraid they will not be sufficient on their own,” McCaul said in a blog post.
“In line with the principle of proportionality, significant crypto-asset service providers should be subject to both stricter requirements and enhanced supervision: neither of the two is catered for by MiCA,” she argued.
Another issues is how the size of crypto-asset service providers is measured because the now-collapsed crypto exchange FTX would not have counted as significant given how the firm was organised.
“In fact Binance, which is the largest crypto player, is alleged to have between 28 million and 29 million active users worldwide, but would probably not even meet the threshold to be classified as significant in the EU,” McCaul said.
The crypto world has been rocked by high-profile failures, bankruptcies and fraud over the past year, but the value of many assets has still risen in the past month as worries about the health of the banking sector prompted some to move away from bank deposits.
McCaul argued that new quantitative metrics are needed that could take into account the type of business, such as volume for trading platforms or assets under custody for custodian businesses.
She said that thresholds needed to be measured at group level rather than at individual entity level, given the complexity of operations. The same goes for conflicts of interest, which must be identified across the group and at affiliated entities, McCaul said.
(Reporting by Balazs Koranyi; Editing by Bernadette Baum)