By now, you’re probably heard of the new European directive targeting crypto. Here’s a summary of what it means and how we handle compliance at enfineo.
This week’s #ItsYourTime session was hosted by Radu Condor, our social media intern. He talked about content creation, social media channels & how to use them, and planning & organizing the content you post there.
The EU has passed the most comprehensive regulatory framework targeting crypto. The new directive voted on the 20th of April, 2023, surpasses the US, UK, and other major economies in terms of crypto regulation. Yes, we’re talking about MiCA, or Markets in Crypto Assets, which will go into effect in 2024.
MiCA aims to unify national laws found in various EU countries into one single directive in effect at a Union level, without the need for national implementation laws. It’s also meant to set more explicit rules surrounding crypto and reduce consumers’ buying risks. This is a welcome step forward toward mass crypto adoption.
This move has been applauded by players in the crypto industry, with Ripple’s EMEA policy director, Andrew Whitworth, calling it “an important milestone for the crypto industry around the world” and Binance’s CEO, Changpeng Zhao, a “pragmatic solution to the challenges we collectively face.”
MiCA is the first complex regulatory framework on crypto, that’s for sure. If we look at the US, for example, in January 2023, it released a roadmap aimed at mitigating crypto-associated risks, with regulators being encouraged to ramp up enforcement. Furthermore, there’s still popular debate about whether crypto should be classified as a security. Needless to say, the future of crypto doesn’t look utopic in the US.
In the UK, Rishi Sunak’s tenure as a prime minister marked the start of his ambition to make the UK a “global hub for crypto asset technology.” He proposed legislation surrounding stablecoins, paving their way to becoming adopted in mass. However, as Forbes notes, “authorities are beginning to clamp down on crypto-related money laundering and fraud concerns,” so during his tenure, we might see Rishi Sunak and financial regulators reach an understanding regarding crypto regulation.
In Brazil, the future looks promising. As we noted on our social media accounts, they’ve made various steps forward, such as allowing citizens to pay their taxes using crypto or Brazilians using stablecoins as a hedge against the inflationary Brazilian Real. Moreover, Brazil has been working on its “Real Digital project,” which is meant to create a CBDC.
India has refused to regulate crypto, and even banned banks from offering their services to crypto firms in 2018. Although the ban was lifted in 2020 by the Supreme Court, Indian authorities are still dismissive of crypto.
Some countries are looking at ways of regulating crypto and gradually accepting and integrating them into the financial system, while others are still battling the phenomenon. Only time will tell which countries made the best decision.
So, how do we approach compliance at enfineo? Well, for starters, we have to comply with both neo-banking regulations & crypto exchange regulations. And if one major regulatory framework wasn’t enough to comply with, imagine two.
But what’s the deal with so many regulations to comply with?
Well, they’re present in order to ensure the protection of customers, and that the money handled by these companies is not involved in illicit activities. Basically, ensure that the money is handled safely and it’s clean.
Although they may be tough to implement, as Cristian Mateescu, CTO, highlighted, “adherence to regulations will separate genuine companies who set out to build Web 3.0 ecosystems from those businesses that want to profit off the lack of regulation in the space”.