Elizabeth McCaul, a member of the supervisory board of the European Central Bank (ECB), has advocated for more regulation of cryptocurrency businesses.
According to McCaul, more effort must be put into considering what international coordination will look like and how it may successfully govern the crypto world.
ECB may craft new crypto regulations
McCaul acknowledged in a blog post dated April 5 that cryptocurrency companies do not have a sufficient regulatory or supervisory framework. Still, he noted that the failure of the FTX exchange had helped cast light on the issue.
“We need to put more consideration into imagining what international coordination will look like.”
Elizabeth McCaul, ECB supervisory board.
She cited the failures of Silicon Valley Bank and Signature Bank in the United States as an example of why policymakers should address possible holes in current frameworks that might lead to bank failures. She urged policymakers to address these potential gaps.
According to McCaul, the fundamental idea of borders and jurisdictions is being questioned in cryptocurrency. She asks how an eye will be kept on businesses without physical boundaries.
In line with that, McCaul believes there is a need to put more effort into visualizing what international coordination would look like and how it may be successful in governing the world of cryptocurrencies.
McCaul says current legislation is not yet enough
McCaul continues that a regulatory framework for cryptocurrencies suggested by the financial stability board and the basel council on banking supervision (BCBS) was “very much in its infancy,” with implementation not anticipated until 2025.
Pending legislation, like the markets in crypto assets framework, may effectively complement rules passed by the BCBS in Europe. Nevertheless, it is also conceivable that these laws will only cover some aspects of the supervision of crypto enterprises claiming no headquarters, as per her statement.
Elizabeth cites in her speech that exchanges such as FTX run their operations using a group structure, while MiCA is only applicable at the level of the individual organization. Large firms like FTX and Binance need a centralized strategy, even if this necessitates changes to the regulation already in place.
The European Central Bank (ECB) is researching the potential effects of introducing a digital euro on the financial system of the European Union. This research focuses on policy concerns and how the token could provide payment solutions for retail customers.
In January, an ECB executive board member, Fabio Panetta, gave a presentation to the European Parliament. He outlined a concept for using a digital euro with cash in retail payments.