- Christina Lagarde, head of ECB, feels the need for a SEC like organization in Europe.
- Europe’s SEC could be based on the principles of MiCA.
Christine Lagarde, head of the European Central Bank (ECB, which issues Euro) said in a speech that Europe needs a single pan-European regulatory authority instead of a patchwork of a national authorities.
According to Lagarde, this would solve the pressing financial challenges currently faced by Europe.
Lagarde has been known for her anti-crypto stance. She was quoted last year mentioning that crypto assets had zero value, a line often used by central bank heads, worldwide.
European authorities are also betting big on Digital Euros‘ success to counter the demand for crypto.
The Statements by ECB Head
Speaking at the European Bank Congress held at Frankfurt, ECB head Christine Lagarde said that Europe needs a regulatory authority which would have a pan-European presence and would operate much like the US SEC.
The need for such an organization, according to her, was to address the pressing financial challenges such as deglobalization, slow growth in European economies and lack of funding.
In the joint IMF and FSB paper on crypto, blockchain based assets have been blamed for diverting funds away from the economy.
Lagarde has earlier said that cryptocurrencies are based on nothing and worth nothing. She has also called them highly speculative. Her statements often find resonance in the speeches of several heads of the central banks in the world, such as in India and the USA.
Will the European SEC be able to work as the US SEC?
The US SEC has already been well known for its anti-crypto stance and going to new limits to curb the presence of crypto in the USA. The organization’s operations were criticized even by the US Congress and its Courts of Law.
However, the European SEC would find it much tougher to work in the continent. European countries have very different sets of regulations with many having for no regulatory framework in place for crypto based companies.
Currently, crypto is governed by individual countries in Europe, most of whom see crypto as a threat. While UK sees itself as a future global hub for crypto, other countries like France charge as high as 30% tax. On the other hand, Bank of Spain has been granting crypto license frequently.
However, European Parliament was able to successfully pass MiCA, a comprehensive law to regulate crypto focused businesses. The law aims to bring much stricter compliances for crypto companies. Companies that are not fully compliant would be fined as high as 12.5% of their annual turnover.
A major portion of the law goes to regulating USD-denominated stablecoins. After the failure of the Terra USD, authorities in Europe want greater compliance with much more transparent and sufficient reserves for stablecoins.
The implementation of MiCA would remain a challenge because the laws allow a moratorium period of upto 36 months for implementation. This would hamper the recognition and licensing of crypto based businesses in Europe, where many would struggle to obtain a pan-European license until all countries implement the law.
Will it Affect Crypto in Europe?
Certainly yes! An organization created by authorities to curb the crypto markets would definitely be a bad news. This would add additional trouble to markets which are already experiencing turbulence due to recent laws and regulatory actions.
What to Expect from Europe’s SEC?
A SEC based on the principle of MiCA would be a positive step even if its much stricter. But, devil lies in the details. If the authority misuses its power like in the USA, it would create much more trouble than its US counterpart and hamper crypto adoption in one of the biggest crypto markets.
Disclaimer: Voice of Crypto aims to deliver accurate and up-to-date information, but it will not be responsible for any missing facts or inaccurate information. Cryptocurrencies are highly volatile financial assets, so research and make your own financial decisions.