Regulation
What ECOWAS Can Learn from Europe’s MICA in Establishing Regulatory Laws for Crypto – Rume Ophi
Story Highlights
- The European Union has become the first jurisdiction in the world to have a regulatory framework tailored to cryptocurrencies.
- The EU has launched MiCA which aims to regulate the wild world of cryptocurrencies and bring them under the will of existing and new European financial laws.
- ECOWAS can build on the success of the EU MiCA by creating a similar regulatory framework for crypto projects under its jurisdiction.
The European Union issued a rule last week that threatened the position of stablecoins within its jurisdiction. The European Market for Crypto Assets (MiCA) regulation stated that unregulated stablecoins would not be allowed to trade in the European Union. This is the result of a bill recently passed and made law by MiCA.
The European Union, through MiCA, is pushing for the adoption of the euro for stablecoins and major cryptocurrency platforms are expected to comply.
Paolo Ardoino, CEO of Tether (USDT), highlighted that development from the EU would be a problem for his company.
Binance CEO Richard Teng said his platform will comply with new EU rules by removing various unregulated stablecoins for European users.
News continues after this announcement
The news continues after this announcement
The leaders of other top crypto exchanges like Kraken and OKX have all agreed to double down on unregulated stablecoins.
The MiCA bill stipulates that the issuance and minting of stablecoins should only be carried out by banks and electronic money institutions.
Reacting to the European MiCA news, Nigerian crypto market analyst Rume Ophi said it was a positive development that jurisdictions had started prioritizing themselves when it came to crypto projects and in doing so, protecting their local currencies.
In an exclusive interview with Nairametrics, Rume Ophi expressed his views on what ECOWAS can learn from the European MiCA and the many benefits an ECOWAS regulatory framework would have for ECOWAS Member States when it comes to cryptocurrency.
What ECOWAS can learn from MICA
According to Rume Ophi, the Economic Community of West African States can take inspiration from the European Union’s MiCA to develop a regulatory framework for crypto projects in its 15 member countries.
In an exclusive interview with Nairametrics, Rume Ophi highlighted three ways ECOWAS member countries could benefit from a cryptocurrency regulatory framework designed and championed by ECOWAS.
This comes against the backdrop of Nigerian President Bola Tinubu, the current head of ECOWAS.
Rume said ECOWAS can achieve these three main outcomes by simply proposing a general regulatory framework within its jurisdiction.
Combating money laundering and the financing of terrorism
Money laundering has been listed as one of the major pitfalls of Binance by Nigerian authorities in their ongoing dispute. ECOWAS can improve the fight against money laundering by having a set of regulatory frameworks that are valid in all member states of the union.
Having a single set of guidelines for all member states makes it easier to track money laundering carried out by Crypto entities within the ECOWAS bloc.
Terrorism remains a hot button issue within the ECOWAS bloc and crypto has been accused of being a tool for financing terrorism.
“Terrorist groups like ISWAP and Boko Haram have had influence in West African countries and crypto has been named as a financing tool for some of these groups,” Rume said.
Having a clear regulatory framework for crypto entities within its bloc would make it easier for authorities to track such cases of terrorist financing.
Encourage investors within your block
A general regulatory framework for all ECOWAS member states would go a long way in providing regulatory clarity to potential crypto investors.
“If ECOWAS creates its own set of rules for crypto projects, it will make it easy for investors to invest in ECOWAS member states without having to comply with the rules of different countries separately,” Rume added.
Regulatory clarity has been cited as one of the major drawbacks for cryptocurrency investors on the global stage. Having ECOWAS have its own regulatory framework for cryptocurrencies would address this challenge and encourage more investors to set up shop in ECOWAS member states.
Protecting local currencies against manipulation
Cryptocurrency exchanges have been accused of being a key accomplice in local currency manipulation leading to the devaluation of these currencies. Rume believed that a stable currency for ECOWAS member states could help prevent currency manipulation and devaluation.
“A stable coin issued by ECOWAS at all levels for ECOWAS member states will protect the local currencies of the countries in the union from manipulation and outright devaluation.” Rume added
ECOWAS can replicate the success of the European Union with MICA in managing the crypto industry under its jurisdiction. This could also go a long way in driving the adoption of cryptocurrencies within the ECOWAS bloc.
What there is to know
- Some parts of the ECOWAS bloc have a very strict, if not total, ban on cryptocurrencies within their territory. Countries like Sierra Leone have banned cryptocurrencies outright and a comprehensive regulatory framework put in place by ECOWAS could help ease these measures in these countries.
- MiCA is a governing body whose mission is to provide rules and regulations guiding the world of cryptocurrencies in Europe.
- The European Union Markets in Crypto-Assets Regulation, MiCA, was created by the European Union, making the EU the first major jurisdiction in the world to have a bespoke crypto-assets law and complete
- MiCA’s 150-page working paper outlines that any company wishing to offer crypto services within the bloc will need to be authorised by one of the EU’s 27 national financial regulators.