Norges Bank, the central bank of Norway, has suggested in its annual Financial Infrastructure Report that the country might decide to go its own way when it comes to crypto asset regulation. The report acknowledges that the European Union (EU) Markets in Crypto Assets Regulation (MiCA) may apply to Norway within a year or two, but questions if this international regulation is adequate for the country’s specific needs.
The central bank argues that targeted regulation, such as MiCA, may not account for risks related to new technological developments and activities. An example of this is the shortcomings in decentralized finance (DeFi) regulation. Furthermore, the bank states that the quality of regulation has a psychological effect on participants, as they need to believe the likelihood of being detected is sufficiently high for the regulation to act as a deterrent.
Norges Bank also warns that allowing the development of MiCA could result in national interests that Norway does not share, driving the process. Therefore, they suggest Norwegian authorities should consider moving forward with their own regulatory solutions, rather than waiting for international ones. This approach aims to prevent private entities from having undue influence over Norwegian regulations such as taxation.
Another concern highlighted by the bank is the lack of experience with crypto assets due to their newness, which can hinder the implementation of effective regulation. The central bank continues to research central bank digital currencies and plans to publish its findings later this year.
In conclusion, the annual report raises questions about the adequacy of international crypto asset regulations like MiCA for Norway’s specific needs. It suggests that creating national regulations based on the country’s interests and requirements may be more appropriate than waiting for international regulatory solutions. The report highlights the importance of experience and expertise in crafting effective crypto regulations and the potential benefits of proceeding more quickly with national regulatory initiatives.