After the news of FTX exchange troubles, some policy experts of the European Union (EU) have come forward to emphasize the need for EU cryptocurrency legislation (MiCA)which has been in the works for some time now. They believe that the crypto legislation is able to mitigate situations similar to that of the FTX collapse including its effect on their customers.
Popular cryptocurrency exchange FTX had reportedly halted withdrawal on its platform and froze users’ funds after news of Binance’s $2 billion FTX token (FTT) dump reached the public. Customers began to initiate large withdrawals for fear of the exchange folding up like the likes of Celsius Network, Three Arrows Capital (3AC), and many others.
From Binance Chief Executive Officer (CEO) Changpeng Zhao, “Liquidating our FTT is just post-exit risk management, learning from LUNA. We gave support before, but we won’t pretend to make love after divorce. We are not against anyone. But we won’t support people who lobby against other industry players behind their backs. Onwards.”
Sensing that its customers might all move their funds out if the situation is not contained, the move made by its users forced the exchange to put its trading on hold. In no time, news of the Binance acquisition of FTX was declared. The CEO of Binance made a tweet about helping FTX by acquiring the exchange.
“This afternoon, FTX asked for our help. There is a significant liquidity crunch. To protect users, we signed a non-binding LOI, intending to fully acquire FTX and help cover the liquidity crunch,” CZ tweeted
MiCA to Promote Customer Protection
So far, this news has raised a lot of dust in the crypto ecosystem, and Stefan Berger, a social-liberal member of the European Parliament who was a lead negotiator on the Markets in Crypto-Assets (MiCA) legislation claims “The crypto space is not a gambling casino. MiCA is the bulwark against Lehman Brothers moments such as the FTX case.”
He noted that the MiCA legislation made provisions for risk management and the segregation of customers’ assets and funds to ensure the firm’s transparency. For now, the EU crypto legislation is still going through certain processes. Last month, the European Council approved the law and it has gained the support of the parliament.