The EU is concerned about the growth of cryptocurrency fraud

The European Securities and Markets Authority (ESMA) has stated that the level of fraud and operational failures related to cryptocurrencies has increased significantly during 2022. Officials see high risks in the cryptocurrency sector and are preparing to take on new obligations under the European Union’s Markets in Digital Assets Regulation (MiCA).

Officials say that due to rising prices and the lack of regulations on cryptocurrencies, virtual assets pose risks that could seriously affect the financial stability of EU countries. This is because there are already many channels of interaction between the cryptocurrency market and the traditional economic system. However, their scope is limited.

Experts asked to imagine a scenario in which commercial giants include crypto assets as a method of payment for services, or a leading technology company introduces peer-to-peer payments based on digital currencies. In the event of a virtual asset crash, consumers will be the first to suffer.

In early July, the Council of the European Union and the European Parliament preliminarily agreed on the MiCA bill, which will allow Europe to become the first part of the world to establish clear rules for digital assets. However, the law on cryptocurrency regulation will not include control over DeFi (decentralized financial systems). In 2023, the European Commission plans to publish a separate report on this issue and launch a pilot project for «DeFi supervision». And last week, the MiCA was again amended to limit transactions for stablecoins that are not backed by the euro. The limit will be up to 200 million euros per day. The new version states that the limit does not apply to stablecoins used to purchase cryptocurrencies. However, it can be used for spot trading in assets on cryptocurrency exchanges.