On June 22, just eight days before the European Parliament, the European Commission and the European Council agreed on a major package of cryptocurrencies regulations (known as the European Union Regulation on Markets in Crypto Assets, or MiCA,) Christine Lagarde, president of the European Central Bank, accused crypto assets and decentralized finance (DeFi) threaten the financial stability of the region.
Crypto companies have long wanted freedom of growth and digital innovation, and the back-and-forth between industry players and lawmakers is nothing new. Back in April, forty crypto companies cosigned an open letter to the EU institutions calling for “sensible regulation, standardized compliance procedures and an innovation-friendly business environment,” lest the directives become overly strict.
The upcoming policy framework is set to regulate unbacked crypto assets, constables, and trading platforms and wallets where crypto assets are held, introducing the need for issuers to be licensed and implementing customer protections for digital tokens to sell. It officially makes Europe first continent to regulate cryptocurrencyand it was branded as the European Union’s response to crypto concerns in the same way GDPR rules were for privacy.
As such, it is a single regulatory framework that oversees crypto issuers and service providers that have so far operated largely unregulated, and which lawmakers consider would benefit from a clear set of checks and balances. However, as they currently stand, the MiCA regulations do not address decentralized crypto-storage and decentralized lending, and may require additional regulatory clarity regarding licenses: the package appears to leave decentralized products unregulated, but that it controls users of the same products, making it unclear when a license is required.
In her comments on June 22, Lagarde expressed concern about the interconnectedness of crypto assets, markets and services with traditional financing, which she identifies as the main risk to financial stability. For this reason, she proposed an additional set of regulations (MiCA II) to supervise crypto-asset betting and lending activities, as well as DeFi, which is currently left out of the first package (MiCA I).
His thoughts on DeFi being a risk to financial stability, specifically, are in line with the views of many other regulators who want more security and stricter control of the sector as a whole: with the total value of DeFi locked at $58.69 billion currently, protections for both consumers, enterprises, and institutional stakeholders are clearly needed. But as MiCA I will not be in place before 2024 – something else that understandably annoys Lagarde – we would have to wait quite a while before the potential MiCA II package would see the light.
By then, the Web3 additions to Web 2 currently underway may be at a very different stage, as its transformation has moved at the speed of light since Facebook changed its name to Meta last year and became ideas such as the metaverse and unfunded tokens advanced. buzz-worthy. Long after it was first conceptualized in 2014, the public’s understanding of what Web3 stands for remains ambiguous, but at its core, Web3 is simply a decentralized, inclusive, and peer-to-peer iteration of the internet. Supported by innovations like blockchain technology, cryptocurrencies, and NFTs, it exists to give power back to its users while reducing the power of third parties and intermediaries like financial institutions.
New products and services that comply with the regulation will arise from the growing interest in cryptocurrencies and decentralized finance. At Concordiumwe believe the future of Web3 will revolve around a mature, reliable blockchain that can be used and trusted by users and institutions such as banks, regulators and businesses.
We created Concordium as a layer-1 blockchain integrated with the ID framework built into the protocol, designed so that the traditional world we live in can seamlessly accommodate the world of tomorrow, without sacrificing performance or user-friendliness.
Although the global adoption of digital currencies has grown to the point where its influence and capabilities cannot be denied, regulators have struggled to keep up and enforce the necessary laws to provide the necessary oversight. to approve. rules are subsequently enforced at the first level of rules to protect consumers, but decentralized product regulation has yet to be dealt with and the technology itself needs to mature in terms of safety, accountability and usability before businesses can trust it enough to build . real infrastructure on blockchain. That’s why Concordium, which supports regulatory compliance, created blockchain with business applications and global adoption in mind.
Blockchain technology needs to move towards maturity and reliability, and as Web3 cannot flourish without the necessary infrastructure to support it, both regulators, blockchain and crypto providers should aim to help fill that gap .
In the struggle between crypto and regulators, only the future will determine a clear outcome. But a mature and reliable blockchain would benefit everyone
Source link In the struggle between crypto and regulators, only the future will determine a clear outcome. But a mature and reliable blockchain would benefit everyone