Regulation
government steps up regulation on cryptocurrency market
In accordance with the new Italian regulations, the government has decided to increase monitoring in the crypto market. More specifically, by introducing new measures to combat market manipulation and other financial crimes.
According to the latest draft policy, penalties for these offenses can range from 5,000 to 5 million euros (equivalent to $5,400 to $5.4 million). Let’s see all the details below.
Severe penalties for market manipulation, Italy’s new crypto regulations
As expected, Italy is preparing to strengthen surveillance in crypto markets as part of its adherence to the European Union’s Regulatory Framework for Markets in Crypto-Assets (MiCA).
According to the new regulations, Italy will intensify surveillance of digital asset markets to combat and punish insider trading and market manipulation schemes.
The decree provides for sanctions ranging from 5,000 and 5 million euros ($5,400 to $5.4 million) depending on the severity and extent of regulatory violations.
Approved for the first time in 2022, the regulatory framework Mica of the European Union presents blockchain companies with difficult choices.
In the meantime, decentralized finance protocols (Challenge) must decide whether to completely decentralize their networks or comply with the framework’s anti-money laundering and identity verification (KYC) regulations.
Completely decentralized networks are exempt from MiCA reporting requirements. However, these protocols risk not to meet MiCA’s definition of a sufficiently decentralized network.
This is due to the use of foundations and other intermediaries that help moderate decentralized communities.
This implies that these DeFi protocols must be completely decentralized or accept that users must submit verification data, a difficult proposition for many network participants.
Changes in stock market business models
Centralized exchange Binance recently informed its European customers that it is moving to a model that classifies stablecoins as authorized or unauthorized.
Model therefore compliant with the MiCA framework, and that users gradually adopt the new system.
Richard Teng, The CEO of the exchange colossus also served Binance which has not yet purchased this stablecoin on the market. Only availability to European users for the specified products is limited.
Richard Teng, The CEO of the exchange giant also noted that Binance is not removing these stablecoins from spot markets. However, this only limits their availability to European users for certain products.
In the same way, Defend made changes to remain compliant with EU regulatory review and announced the delisting of six stablecoins.
These include Tether (USDT), Frax Protocol (FRAX), Pax Dollar (USDP), Dai (DAI), TrueUSD (TUSD), and Gemini Dollar (GUSD).
Despite growing regulatory pressure in Europe, many experts believe that stablecoins have a promising future. Additionally, they claim they could potentially prevent debt crises caused by excessive issuance of fiat currencies.
Former Speaker of the United States House of Representatives, Paul Ryanrecently said that stablecoins could help alleviate shortcomings in the US economy due to the debt-laden US dollar.
Even Jeremy Allaire, CEO of stablecoin issuer Circle, expressed optimism about the future of stablecoins. In particular, he said he believed these would make up 10% of the money supply over the next decade.
New rules for the stability and security of crypto-assets
The European Banking Authority (EBA) recently published a comprehensive set of standards and technical guidelines in accordance with the Markets in Crypto-Assets (MiCA) Regulation.
Thus offering a clear guide for Asset Referenced Tokens (ART) and Electronic Money Tokens (EMT) across Europe.
The package addresses six key topics, ranging from stress testing programs and asset reserves to recovery plans. According to MiCA, ART are tokens backed by assets such as commodities, real estate, or a diversified basket of assets.
On the contrary, the EMT maintain a stable value because they are anchored in fiat currencies and used for payments, similar to stablecoins.
The authority has set out a series of guidelines for token issuers, highlighting the need to have sufficient financial resources (equity) to cover potential risks.
Parameters are also established to identify whether an issuer presents a higher degree of risk, which would require an increase in capital reserves.
The EBA guidelines specify the procedure and time frame within which issuers must adjust their funds to 3% of the average reserve of assets classified as significant.
The implementation plan must be submitted within 25 working days and compliance must be achieved within a maximum of six months.