Mairead McGuinness, the European Commission’s commissioner for financial services, warned about the dangers that digital assets could pose to financial stability and called for US politicians to draw up new rules to govern the crypto industry.
Per the Financial Times, during a trip to Washington, DC, the commissioner met politicians who are at the center of crypto regulation discussion in the USA, including the Republican member of the House Patrick McHenry and the Democratic senator Kirsten Gillibrand.
McGuinness told the Financial Times that she was “encouraged” by the meetings and that the US politicians seem to be “moving in the same direction” as their EU counterparts.
She added, however, that,
“There’s a lot of concern at a European level as to [what would happen] if crypto were not to be regulated. There could be — in time, if it grows — financial stability problems. There also are investor issues around a lack of certainty.”
Ever since the collapse of the Terra/LUNA ecosystem, the market crash this year, as well as the following string of bankruptcies, regulators across the world have sharpened their already growing focus on the industry.
McGuinness argued that any regulation imposed on the industry has to be global if it were to work. Referring to other countries that have started following the EU’s lead on crypto regulation, she told the news outlet that,
“We do need to see other players also legislating, perhaps differently, but with the same objective… We need to look at global regulation of crypto.”
Similarly to McGuinness, the Financial Stability Board called for a global framework for crypto regulation efforts. Last week, as reported, this international advisory body created by the G20, laid out its recommendations for crypto regulation and said that most existing stablecoins are not in compliance.
However, when it comes to the US, the Financial Times report cited people “close to negotiations,” saying that the two parties are still months away from reaching an agreement on key questions, including the stablecoin regulations. This is despite the increased effort to come to an agreement over the industry regulation among politicians and regulatory agencies, with some taking a tougher stance towards crypto companies specifically, such as the Securities and Exchange Commission (SEC).
At the beginning of the month, the group of financial regulators comprising the US Financial Stability Oversight Council issued a report, calling on politicians to reach an agreement on crypto-related matters. Among other conclusions, the Council recommended taking “steps to address regulatory arbitrage, including coordination, legislation regarding risks posed by stablecoins, legislation relating to regulators’ authorities to have visibility into, and otherwise supervise, the activities of all of the affiliates and subsidiaries of cryptoasset entities, and appropriate service provider regulation”
Famous Canadian businessman and television personality Kevin O’Leary, aka Mr. Wonderful, argued that a piece of regulation called the ‘Stablecoin Transparency Act’ has a chance of getting passed by the US Congress “very quickly” after November 8, the date of the midterm elections. Per him, both the Democrats and the Republicans support some form of crypto regulation – so the regulations are coming, he stated.
Meanwhile, over in the EU, a major event occurred just this month: after two years of discussions, the EU’s landmark crypto legislation – Markets in Crypto Assets Regulation (MiCA) – passed the European Parliament. The bill aims to regulate all crypto-related activities.
Also, as reported recently, the European Commission, which is the EU’s executive branch that proposes legislation and implements decisions, seeks to have automated software to monitor decentralized finance (DeFi) activity via the Ethereum (ETH) blockchain data.