regulate cryptocurrencies

Why MiCA II should regulate Crypto Currency

The recent major crash in the cryptocurrency market has drawn the attention of regulators all over the world. Christine Lagarde, President of the European Central Bank, called for additional regulation of bitcoin (BTC) and the decentralized finance (Defi) sector, among other things under the MiCA II proposal, which is a regulatory framework developed in 2018.

Regulation of cryptocurrencies by the ECB

Christine Lagarde delivered a speech to the European Parliament. Lagarde explicitly called for more regulation of the cryptocurrency industry. Crypto assets such as bitcoin and DeFi, she believes, could pose a serious threat to the rest of the financial world.

What new crypto regulations are there?

The European Union has already prepared a regulatory framework to soon regulate the crypto industry, known as Markets in Crypto-Assets (MiCA). According to Lagarde, this legislation is already inadequate, and a MiCA II would be required in the short term. Strikes and crypto lending in particular should be governed by this.

I believe MiCA II should regulate cryptocurrency asset lending and staking, which are certain to grow in popularity– Christine Lagarde

Lagarde clearly believes that DeFi poses a “real risk to financial stability” and should be subject to a separate regulatory framework. As a result, the world’s most prominent cryptocurrency, bitcoin, which does not have a single definable issuer, would be subject to this regulatory framework in the future.

“Bitcoin is not covered under the MiCA I, but hopefully you will consider it for the MiCA II.”

It does not appear to be a coincidence that Lagarde is calling for crypto sector regulation so urgently right now. We recently witnessed the demise of the Terra (LUNA) network, but we also witnessed major issues with, among other things, the crypto lending platform Celsius. Supervisors are obviously not fond of these types of scenes.

 

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Harsh Kumar
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