Crypto NewsAltcoinCryptocurrency Alert from EU Regulator!

Cryptocurrency Alert from EU Regulator!

The EU's financial stability watchdog has expressed concern that the rapid growth of cryptocurrencies and the DeFi sector could pose risks to the economy.

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In the past weeks, the European Crypto Asset Markets (MICA) regulation, which forms the main framework of the status of crypto assets in Europe and the regulations that may be encountered in the future, received the final approval from the European Parliament.

After the approval of MICA, EU regulators continue to work on new measures to create new rules for the cryptocurrency industry and protect the interests of retail investors.

According to the news of Coindesk, the European Systemic Risk Board (ESRB), the EU's financial stability watchdog, expressed its concerns that the rapid growth of cryptocurrencies and the DeFi sector may pose risks to the economy.

Stating that new regulations may be needed to cover large crypto money companies in this context, the ESRB, headed by EU central bank chief Christine Lagarde, pointed out that leverage rates in crypto money transactions should also be limited.

“Systemic risks can arise quickly and suddenly. If the rapid growth trends observed in recent years continue, crypto assets may pose a risk to financial stability.

At this point, a clause should be added to MICA, which stipulates that it imposes leverage limits for mutual funds exposed to crypto assets.

Limits should also be placed on crypto companies lending tokens to their customers, which is one of the popular ways to place highly leveraged bets.”

Finally, in the ESRB report, it was stated that although the past 2022 was turbulent for the cryptocurrencies and DeFi sector, the necessary measures should be taken in this context, where systemic results have not yet occurred.



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