European crypto law is not without risk, EU boss warns

The Crypto Asset Markets Act (MiCA) will come into force next year. However, according to Verena Ross, there are still some snags in the law. The head of the European Securities and Exchange Commission reports that the clauses do not take into account all current events. Investors and entrepreneurs should therefore remain on their guard crypto get into the industry.

The MiCA law does not offer a risk-free crypto market

Ross is the head of the European Securities and Markets Authority (ESMA). ESMA was the driving force behind the development of the MiCA law. However, she relented on Wednesday in an interview there are still many loopholes in the law. The publication of a new law can take a long time and the MiCA law itself is already outdated.

The law was drafted well before the events of 2022, like the Terra crash and the FTX fiasco. Although the law can be changed in the form of “amendments”, it is difficult to repeal laws of this magnitude. It requires a long debate and if a bug is found, you have to go back to the drawing board.

In the interview she said:

“Consumers should be aware that MiCA does not offer the same level of protection as traditional financial products.”

She refers to the stock market, which has been strictly regulated for decades. In comparison, the crypto industry is much younger and there are still many companies and programs with so-called “teething troubles”.

MiCA can have a positive impact

Despite the problems and the law’s obsolescence, Ross acknowledges that the MiCA law will have a positive impact on the crypto market. While it’s a tall order for businesses to deal with, the reassurance the law offers is very welcome. Investors can get in with less risk, which can attract many more interested people to the market.

Companies are obliged to get a better picture of their customers and to inform them appropriately. Risky programs will also be banned and transparency must be significantly increased. According to experts, the law could give Europe a significant advantage over countries like the US. The law was passed in April and will be fully operational by the end of 2024.

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