The revolutionary technology that is blockchain has always been a notoriously difficult field to regulate. The tentacles of most nations’ legal frameworks struggle to adapt and wrap themselves tightly around the fluid, diverse, and rapidly evolving body that is crypto-technology. A perfect exemplification of this issue is the recent emergence of the Markets in Crypto-Assets (MiCA) rules in the European Union.
The MiCA guidelines spark a flash of brilliance by addressing one of the most infuriating elements of our industry. Primarily, MiCA proposes tighter rules and stricter penalties for crypto-asset service providers like Binance or Coinbase, who consistently shirk responsibility when customer funds are lost or stolen, leading to billions of dollars in losses and countless broken lives. However, like a badly cut diamond, the good is marred by several ugly flaws.
While MiCA does plan to clamp down on market manipulation, the fact remains that the majority of such activity is happening offshore, hence rendering these regulatory efforts somewhat irrelevant. It’s akin to setting up elaborate traffic rules in an abandoned ghost town. Moreover, an astonishing lack of thought was applied to decentralized finance (DeFi) and future central bank digital currencies, which play a major role in many crypto transactions.
A threatening cloud hanging above MiCA is a point termed “The Travel Rule”; forcing service providers to identify both parties for every transaction. This rule, combined with a low €1000 reporting threshold, would systematically erode privacy rights, leading to a dystopian surveillance state.
Another blight on MiCA’s potential is the requirement for official approval prior to launching tokens, which would greatly inhibit the birth of legitimate projects within the EU due to anticipated legislative inefficiency and sluggishness.
On closer examination, the MiCA guidelines reveal that they are not quite the protectors of the crypto-realm they first appear to be. Indeed, they might significantly contribute to the very destruction they seek to avoid. In summary, while the MiCA regulations are a step in the right direction, they fall short of the sophisticated, comprehensive response that the crypto community and the world at large genuinely deserve.
Source: Cointelegraph
