By George Ward
The Governor of France Central Bank, Villeroy de Galhau, has called for international collaboration to ensure regulatory implementation that oversees the activities of crypto behemoths. Speaking at the recent ViVaTech event, the bank executive noted that global cooperation is necessary to counter the threat of crypto conglomerates on the world’s economic stability.
Insufficient Crypto Regulation
Due to the lack of a suitable regulatory framework to cover all the complicated areas in the digital asset industry, de Galhua noted that it is time to revisit the recently proposed markets in crypto asset (MiCA) regulations. Recall that the European Union (EU) recently adopted the MiCA law to oversee the crypto space within its 27 member nations.
As a result, the French central bank chief wants decision-makers to review the legislation to implement more comprehensive regulations for the crypto industry. De Galhua cited the strategies employed by American crypto entities, where they adapt to different regulatory policies when they operate across various jurisdictions.
According to de Galhua, these occurrences emphasize the critical necessity for global cooperation in addressing intricate policy issues such as crypto regulations. However, he recognized the commendable progress made by the EU in regulating the cryptocurrency industry.
The Bank of France Governor added that there is a need for an updated version of the MiCA legislation. According to him, “MiCA 2” refers to this revised legislation, specifically targeting regulatory measures relating to conglomerates in the digital asset ecosystem.
The European Parliament reportedly approved MiCA 2 in April 2023, while the EU Council endorsed it a month later. Many industry players consider this joint move a significant initiative to regulate and oversee the cryptocurrency industry comprehensively.
The EU hastened its efforts regarding MiCA 2 following noteworthy events in the crypto space, notably the surprise downfall of prominent crypto firms last year.
Support For MiCA 2
There was a need for MiCA 2 because the current MiCA regulatory framework didn’t cover some products and services associated with digital assets. Remarkably, crypto lending, non-fungible tokens (NFTs), and decentralized finance (DeFi) fall outside its regulatory scope under the MiCA provision.
As a result, influential figures in the EU, such as Christine Lagarde, the President of the European Central Bank (ECB), voiced support for additional regulations to cover these missing aspects. Addressing startups, investors, and executives at the Paris tech event, the France central bank head stressed that introducing DeFi into the financial landscape needs close and urgent supervision.
While he admitted that there is a need for certain entities to utilize this technology for the financial services they provide, de Galhua emphasized that there is a need to establish urgent and custom regulations for this industry to mitigate operational risks. He further noted that these measures will safeguard the interests of investors and consumers.
He also said it would help cultivate an environment of trust and stability in the market. By establishing transparent guidelines and benchmarks, regulators can mitigate money laundering risks, fraudulent activities, and market manipulation.
Meanwhile, it is worth noting that the MiCA regulations are expected to become effective from 2024 in all the EU member states.