Regulation
Here is the EU’s radical solution to secure the ecosystem!
9:45 a.m. ▪ 3 min reading ▪ by Eddy S.
In a bold move to regulate the crypto market, the European Union (EU) recently classified Maximum Extractable Value (MEV) as illegal market abuse under its Markets in Crypto-Assets (MiCA) Regulations. . The move aims to curb sophisticated market manipulation and ensure fair competition among all participants.
Regulatory implication of MEV
MEV is the profit that block producers can obtain by rearranging, including or excluding cryptographic transactions within a block. This practice can make the system unfair, giving an advantage to those with more resources and technical knowledge.
The classification of MEV as market abuse could pose significant obstacles to EU-regulated crypto businesses. According to the consultation, EU-based companies would be required to detect and report cases of VPDs as “suspicious transaction or order reports” (STOR).
Reactions from the crypto industry
Prominent figures in the crypto industry suggest different ways to solve this problem. Vitalik Buterin recently discussed issues related to the MEV, proposing to reduce MEV through protocols which could hide transaction details until confirmed. He also suggested separating transaction proposers from block builders to limit unfair value extraction.
American financial regulators are also aware the MEV threat. The US Department of Justice (DOJ) announced the arrest of two brothers for using MEV tactics to steal $25 million from Ethereum. They are accused of fraud and money laundering and could face prison terms of up to 20 years.
With this regulation, the EU is taking strong steps to ensure transparency and fairness in the crypto market. As the debate over MEV and its impact on network security and trade fairness continues, the EU is positioning itself as a key player in the fight against market manipulation in the ecosystem. Trading platforms will need to adapt quickly to comply with new requirements, which could reshape the future of cryptocurrencies in Europe and beyond.
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Eddy S.
The world is evolving and adaptation is the best weapon to survive in this undulating universe. Basically a crypto community manager, I am interested in everything directly or indirectly related to blockchain and its derivatives. In order to share my experience and raise awareness of a field that fascinates me, there is nothing better than writing articles that are informative and relaxed at the same time.
DISCLAIMER
The views, thoughts and opinions expressed in this article belong solely to the author and should not be considered investment advice. Do your own research before making any investment decisions.