Member of the European Central Bank’s supervisory board, Elizabeth McCaul, has called for greater regulation of cryptocurrency businesses. As McCaul points out, more efforts need to be put into evaluating how international coordination will function and how it can be implemented successfully.
ECB may craft new crypto regulations
McCaul acknowledged that cryptocurrency companies lack an adequate regulatory or supervisory framework. Nonetheless, he noted that the failure of the FTX exchange had shed light on the problem.
According to her, the failures of Silicon Valley Bank and Signature Bank in the United States are reasons why policymakers should address potential gaps in current frameworks. She urged policymakers to close these possible gaps.
As Supervisory Board member Elizabeth McCaul points out, we need to identify and close gaps in global cryptocurrency market supervision. We require improved international coordination and more consolidated oversight.
According to McCaul, cryptocurrency is calling into question the fundamental concept of borders and jurisdictions. She wonders how businesses will be monitored without physical boundaries. In line with this, McCaul believes that more effort should be put into visualizing what international coordination would look like and how it could be successful in governing the world of cryptocurrencies.
McCaul says current legislation is not yet enough
McCaul goes on to say that the financial stability board’s and the Basel Council on Banking Supervision’s (BCBS) proposed regulatory framework for cryptocurrencies was “very much in its infancy,” with implementation not expected until 2025.
Pending legislation, such as the framework for markets in crypto assets, may effectively supplement rules passed by the BCBS in Europe. However, as she stated, it is possible that these laws will only cover some aspects of the supervision of crypto enterprises with no headquarters.
Elizabeth mentions in her speech that exchanges like FTX operate on a group structure, whereas MiCA is only applicable at the individual organization level. Large firms like FTX and Binance require centralized strategies, even if this necessitates changes to existing regulations.
The European Central Bank (ECB) is investigating the potential effects of introducing a digital euro on the European Union’s financial system. This study focuses on policy issues and how the token could be used to provide payment solutions for retail customers.
Fabio Panetta, an ECB executive board member, gave a presentation to the European Parliament in January. He sketched out a plan for using a digital euro alongside cash in retail payments.