Crypto Watchdog Ensures Fun and Safety in European Markets
The European Systemic Risk Board (ESRB) has released a lively report on the state of the crypto industry, highlighting its minimal economic impact but emphasizing the need for vigilant monitoring and risk mitigation. The watchdog suggests policy options to better oversee the sector and prevent any potential contagion.
One of the report’s key recommendations is the monitoring of leveraged trading in the crypto industry. The ESRB emphasizes that leverage becomes problematic when it intersects with the traditional financial system, underscoring the importance of ongoing surveillance.
In addition, the report stresses the need for coordination and cooperation between Europe and other countries due to the cross-border nature of cryptocurrencies. This collaborative approach aims to maintain the low economic impact of crypto trading.
The report has sparked discussions on how to effectively manage the risks associated with the interconnectedness of crypto and traditional finance. Experts advocate for continued monitoring rather than implementing strict policies preemptively.
Christian Zimmermann, partner and chief legal officer at Greenfield Capital, highlights that the Basel Committee’s regulatory measures have already limited the risk for banks in direct exposure to crypto-assets. These measures require banks to back certain assets with their regulatory capital, ensuring a secure approach.
The ESRB’s report may also shape future reviews of Europe’s regulatory framework for crypto assets, such as the Markets in Crypto Assets (MiCA) regulations, which aim to establish unified standards across EU member states.
While closely observing crypto markets and DeFi, regulatory bodies in the EU are committed to fostering a safe and enjoyable environment for crypto enthusiasts. Despite recent challenges, including market fluctuations and high-profile incidents, the industry continues to evolve with a focus on resilience and responsible growth.
Clever Robot News Desk 26th May 2023