As events following the collapse of FTX and its protracted effect on investors and the industry continue to unfold, European Union (EU) lawmakers share different views on how its proposed Market in Crypto Asset (MiCA) would have impacted the FTX’s unfortunate collapse.
While some lawmakers are of the opinion that the MiCA bill would have strongly protected EU citizens from the FTX contagion, others are not so sure that would be the case. In an interview with The Block, MEP Ondrej Kovarik said MiCA wouldn’t have fully stopped or prevented the fallout even though it would improve transparency and protection levels for investors.
According to Ondrej, judging from the location of FTX, it is difficult to ascertain whether any EU regulations could have had an impact on the fallout.
Although some aspects of the contagion would have been controlled or somewhat alleviated in some instances, the fallout wasn’t entirely down to crypto asset regulations according to Ondrej, a co-author of the bill. Furthermore, the Czech MEP argued that “The real causes of the crash lie also somewhere else than what a crypto asset regulation can actually cover.”
In conclusion, Ondrej said the FTX debacle is a developing story that is not limited to only one exchange. Adding that, policymakers need time to see how events unfold and decide if they can be fully resolved by adjusting the regulatory framework on digital assets.
MiCA to Protect Investors
In the wake of the FTX’s sudden collapse, some policy experts of the EU believe that the anticipated MiCA legislation is able to mitigate situations similar to that of the FTX collapse including its effect on their customers.
However, in July José Manuel Campa, president of the European Banking Authority (EBA), said the organization’s inability to follow the MiCA’s regulations was due to a lack of trained people with experience in cryptocurrencies.
Interestingly, the MiCA bill is a framework outlining guidelines of operations for crypto service providers operating within the EU. With the final hurdle expected to be crossed in February, if approved, regulators in member countries have 12 to 18 months to work out the details before it is implemented in 2024.