Cryptocurrency Regulation Becomes a Trending Topic for European Regulators

Governor of Banque de France, François Villeroy de Galhau, spoke about cryptocurrency regulation at a conference on digital finance in Paris on September 27. The French central bank boss noted:

“We should be extremely mindful to avoid adopting diverging or contradictory regulations or regulating too late. To do so would be to create an uneven playing field, risking arbitrage and cherry picking.”

The central banker further stated that “unduly complex” cryptocurrency regulations could fail to protect investors and prevent money laundering practices.

The European Commission (EC) first made mention of the Markets in Crypto Assets Regulation (MiCA) bill in September 2020 as part of the agency’s digital finance strategy to bring crypto assets, crypto asset issuers, and service providers across the Eurozone under one regulatory framework. The European Parliament and Council reached an agreement on the MiCA bill in late June this year. However, the MiCA bill is not expected to go into law until 2024.

ECB Announces Plans to Harmonize Cryptocurrency Regulation in the Eurozone

Last month, the European Central Bank (ECB) outlined its plans to harmonize the regulatory framework overseeing crypto activities and services in the Eurozone. At the time, the central bank noted, “There is currently no harmonized regulatory framework governing crypto-asset activities and services in the EU,” adding that banks are becoming more pressured to offer crypto products and services to their customers and that it was the central bank’s role to “ensure they do so safely and soundly.”

The European Securities and Markets Authority (ESMA), the EU’s top securities markets regulator, previously warned that ballooning inflation could prompt retail investors to seek refuge in cryptocurrencies. ECB Vice President Luis de Guindos mentioned earlier this week that Eurozone inflation was “increasingly broad while growth is weakening.” He explained: “We are seeing that in the third and fourth quarters, there is a significant slowdown and we may find ourselves with growth rates close to zero.”