Regulated After All – EU Crypto Framework
Regulating the cryptocurrency industry has been the single hardest job in the past few years as agreements simply can’t be made. For what is such a global product, there is no global organization with the authority to regulate the financial instrument, leaving different institutions to deal with it how they want. The SEC, for example, has differing views on crypto compared to other countries’ regulatory bodies, creating a conflict.
However, Europe might have provided the rest of the world with a framework to abide by when it comes to regulating the crypto industry. The EU Parliament voted to pass the Markets in Crypto Act, the first package of rules addressing the regulation issue, and it touches on a lot of concerns surrounding the industry. Stablecoins like Tether would be required to maintain a mass number of reserves in case mass withdrawals occur, and large ones could also be limited to $220 million in transactions per day. New token sales are now going to be under regulation, and ESMA, the European equivalent of the SEC, has the power to ban crypto platforms that aren’t properly protecting investors. To keep the industry within environmental standards, crypto businesses are forced to disclose their energy consumption and environmental impact.
The regulation is being praised throughout the crypto world, with CZ calling it a pragmatic solution to the industry’s problems. Europe seems to be ahead of the pack as the United Kingdom and the US are yet to come out with something like this, and it’s a matter of time before we see how effective these new rules are.
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I am not a financial advisor and my comments should never be taken as financial advice. Investments come with risk, so always do your research and analysis beforehand.