The potential for regulatory arbitrage and the decentralized nature of certain crypto assets underscore the need for some level of harmonization in regulation across major jurisdictions, argues a new report published by the European Parliamentary Research Service (EPRS).

The report’s recommendations include enhanced oversight from non-European Union (EU) regulators to ensure greater stability and development in the global cryptocurrency market.

The report also highlights concerns about various channels through which the EU’s financial system and autonomy may still be at risk, particularly as it remains reliant on policy actions taken by non-EU countries within the scope of the Markets in Crypto-Assets Regulation (MiCA)—the EU-wide regulatory framework for crypto assets that is set to be implemented in December 2024.

“Current regulation in non-EU countries raises questions about financial stability, since the global financial institutions may be unable to cope with large price variations –volatility – and the losses incurred by shocks in crypto-asset markets,” the report stated.

The authors also pointed to the “interconnectedness of global financial markets,” which—along with the potential for regulatory arbitrage and the decentralized features of certain cry

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Author: Andrew Asmakov

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