ECB Official Says Upcoming MiCA Bill Lacks Adequate Supervision Rules for Exchanges

European Central Bank supervisory board member Elizabeth McCaul says the upcoming European Union Markets-in-Crypto assets bill does not provide adequate supervision for crypto exchanges.

McCaul argues that while the new bill is a progressive step, it does not supervise exchanges based on quantitative metrics.

McCaul: MiCA Would Not Consider FTX and Binance ‘Significant’

In its current iteration, the MiCA bill would not have considered FTX a significant crypto asset service provider, despite the exchange having less than 15 million customers. McCaul points out that even Binance may not make the cut despite having between 28 and 29 million global customers.

Rather, she suggests that the bill should be enhanced by metrics like trading volume and assets under custody.

Citing a 1970s initiative by the Basel Committee on Banking Supervision, McCaul believes these metrics must represent the corporate group that an exchange belongs to rather than just a local entity.

Considering FTX, she added that even if the exchange had basic risk and governance controls, regulators had no oversight of its operations in different jurisdictions.

FTX’s rival, Binance, also operates in multiple jurisdictions and has not disclosed its physical location since leaving Japan in 2018. This lack of domicile for regulatory purposes doesn’t mean the group should not be subject to legal accountability, McCaul argues.

Upon taking over leadership of FTX and its associated entities after the exchange filed for bankruptcy in Nov. 2022, incoming CEO John Ray harshly criticized the exchange’s lack of corporate controls.

Haphazard Approach to Risk Not Helpful, Says Professor

While some crypto firms have adopted a risk-management approach required by large financial institutions in the U.S., after the 2008 financial crisis, no uniform federal standards exist that Go to Source to See Full Article
Author: David Thomas

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