A lot has happened recently in the crypto world, culminating in the collapse of the stablecoin TerraUSD (UST) and its sister coin Terra (LUNA) in May 2022. UST, which was supposed to have a stable value of 1 dollar, plummeted to just 0, 01, which wiped out $60 billion in value and severely damaged confidence in stablecoins and crypto assets.
The lack of regulation in the crypto industry has led to a situation that is often compared to the 'Wild West'. In response, the European Commission (EC) has presented the proposal for the Markets in Cryptoassets Regulation (MiCA), with the aim of limiting the risks of digital financial services without hindering innovation. Although a provisional agreement was reached between the EC, the Council and the European Parliament in June 2022, MiCA has not yet been formally adopted. In this contribution, Peter Hoefnagels discusses three important comments on the proposal:
- The lack of detailed rules for crypto service providers, leading to insufficient investor protection compared to MiFID II.
- The lack of opportunities for Member States to further develop the rules
- The shortcomings in managing macroprudential risks in stablecoins.
The article further discusses the need for MiCA, the basic principles of the regulation, and the current regulatory flaws. Read the entire contribution (in Dutch) via the button below.
