By George Ward
With the FTX collapse, the European Union (EU) is increasingly monitoring the activities of offshore crypto service platforms within the bloc. Accordingly, international crypto firms operating in the EU will be scrutinized to ensure that they follow the new guidelines directed by the EU.
With the much-talked-about Market in Crypto Assets (MiCA) regulation still on the way, the European Securities and Markets Authority (ESMA) is currently working on establishing the implementation specifics for the new rules. The likely implementation of the MiCA regulation will be by 2024.
With the new move, all EU member states are empowered to ban or penalize unregistered platforms deemed to have false advertisements or websites. According to Jan Ceyssens, the head of digital finance at the commission, once MiCA is implemented, regulators will target those platforms that are still active and have not been authorized to advertise and offer their services within the EU.
Cassens further added that the ESMA guidelines have already indicated what “reverse solicitation” means instead of what the law covers. The head of digital assets at the European Commission explained that this reflects the technique that allows offshore crypto firms to continue operating in the EU market without approval.
The reverse solicitation became a topic of discussion last week during the FTX hearing at the European Parliament. The head of risk analysis at ESMA, Steffen Kern, added that reverse solicitation is a common problem in crypto and has been a concern to regulators, especially in the EU.
Moreover, Kern stressed that the EU cannot handle this alone and expects other players outside the EU to play a critical role.
FTX Crash And Regulatory Gap
With the end of 2022 approaching, many in the crypto industry will look back at the happenings this year as one of the most eventful for the digital asset sector.
The sudden downfall of the Sam Bankman-Fried FTX Group has been the most painful for stakeholders in the digital asset ecosystem.
Amid the ups and downs, retail customers are the most affected by the events. Due to the apparent lack of regulatory oversight, billions of investments have gone down the drain.
Many times this year, US lawmakers have talked extensively about a crypto regulatory implementation after every significant fallout like the Terra and FTX fiasco. But they have failed to back their words without any concrete actions.
With the FTX collapse, the role of regulators has been the point of discussion. The former FTX boss is believed to have close ties with the US Securities and Exchange Commission (SEC) Chairman, Gary Gensler.
About eight congresspeople were fingered to have received donations from Bankman-Fried. Due to the impact of the recent debacle, it would be interesting to see how regulators will handle the issue.