MEV designated as ‘unlawful’ market abuse under EU MiCA

The European Union (EU) under the Crypto Asset Markets (MiCA) has named Maximum Extractable Value (MEV) as a clear example of an illegal market manipulation strategy.

ESMA disapproves of MEV market abuse

The European Securities and Markets Authority (ESMA) has published its third consultation file with the aim of setting out in clear terms how certain statements in the law can be interpreted. This approach aims to help remove any form of ambiguity in the law, the full implementation of which is planned in months.

EU-designated MEV attacks are widespread across the financial ecosystem, including the crypto ecosystem. The recently published article according to Patrick Hansen, Head of European Strategy and Policy at Circle, gave a precise definition of what MEV means.

“The famous maximum extractable value (MEV) by which a miner/validator can take advantage of its ability to arbitrarily rearrange transactions to preempt one or more specific transactions and therefore make a profit” clearly suggests the existence of market abuse. ”, we read in the report on page 10.

In order to prevent such attacks, ESMA will turn to trading platforms to report such incidents of MEV market abuse. While there are intricacies to resolving this issue, regulators are seeking to make MiCA’s provisions as comprehensive as they are clear.

As part of its in-depth approach, ESMA has also published a 6-page draft presenting the reporting template for these suspicious transactions. Although not final, this provision could likely see additional changes in the coming months. The European markets regulator is seeking feedback from stakeholders on the proposals, with the deadline set for June 25 to submit comments.

The EU seeks to reposition itself for business

The EU’s fight against MEV market abuses and other resulting market incidents emerges as one of the ways the bloc is seeking to reposition itself in the capital market.

According to an earlier article by Hansen on negative trends in several key areas. Faced with the decrease in the share of investors’ capital, Hansen expressed his main concerns. He predicts that the region could fall behind other countries like the United States if it does not take appropriate measures.

Amid these claims, Bitcoin, through the implementation of MiCA, could help reposition the block if necessary.

Learn more: Argentina Uses El Salvador’s Bitcoin Strategy Amid Growing Crypto Adoption

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