The Governor of the Bank of France has emphasized the importance of international cooperation in regulating crypto conglomerates. Speaking at a tech forum held in Paris, Governor Villeroy de Galhau proposed the need for an updated version of the European Union’s crypto legislation, known as MiCA, to address this issue.
Governor Villeroy highlighted that regulating a single legal entity within a jurisdiction is insufficient when dealing with crypto giants. He pointed out the example of U.S. crypto companies, which operate through different legal entities across multiple jurisdictions. According to Villeroy, this situation necessitates international collaboration to effectively regulate these conglomerates.
While acknowledging that the European Union has made significant progress in crypto regulation, the central bank executive suggested that a revised version of the Markets in Crypto Assets (MiCA) legislation, referred to as “MiCA 2,” might be necessary to tackle the regulatory challenges posed by crypto conglomerates.
MiCA was approved by the European Parliament in April and subsequently endorsed by the EU Council in May, making it the first comprehensive attempt to regulate and oversee the crypto sector worldwide. However, certain activities, products, and services related to digital assets, such as crypto lending, decentralized finance (defi), and non-fungible tokens (NFTs), fall outside the scope of MiCA. This has led officials and policymakers, including ECB President Christine Lagarde, to advocate for the adoption of a separate set of regulations, referred to as ‘MiCA 2.’
During the tech forum, which brought together startups, executives, and investors in Paris, Governor Villeroy stressed that actors utilizing decentralized finance for financial services should be subject to regulation. He argued that the same risks and rules should apply to these actors, as their actions carry similar implications.
The question remains whether global regulations for crypto conglomerates will be established. Feel free to share your thoughts in the comments section below.
Frequently Asked Questions (FAQs) about Regulation
Q: Why does the Bank of France Governor believe international cooperation is necessary to regulate crypto conglomerates?
A: The Bank of France Governor, Francois Villeroy de Galhau, believes that international cooperation is essential to regulate crypto conglomerates because it is not sufficient to regulate a single legal entity within one jurisdiction. Many crypto companies have different legal entities operating across various jurisdictions, making international collaboration necessary to effectively regulate these conglomerates.
Q: What is MiCA and why does the Governor suggest a new version, “MiCA 2”?
A: MiCA stands for Markets in Crypto Assets, which is a comprehensive set of regulations approved by the European Union to regulate and supervise the crypto sector. The Governor suggests a new version, “MiCA 2,” because certain activities, products, and services related to digital assets, such as crypto lending, decentralized finance (defi), and non-fungible tokens (NFTs), are currently outside the scope of MiCA. To address these regulatory gaps, an updated version of MiCA is proposed.
Q: What are the concerns regarding crypto conglomerates and their regulation?
A: Crypto conglomerates present challenges in terms of regulation due to their complex structures and operations spanning multiple jurisdictions. Regulating a single legal entity within a jurisdiction is insufficient to oversee these conglomerates effectively. There is a need for international cooperation and collaboration to address the risks and ensure consistent regulation across all entities within crypto conglomerates.
Q: Why is decentralized finance (defi) mentioned in the context of regulation?
A: Decentralized finance (defi) is a technology utilized for financial services in the crypto sector. The Bank of France Governor emphasizes that actors using defi for financial services should be subject to regulation. This is because the risks associated with these activities are similar to traditional financial services, and applying the same rules and regulations ensures a level playing field and mitigates potential risks in the decentralized finance space.
More about Regulation
- Bank of France
- Markets in Crypto Assets (MiCA)
- European Central Bank (ECB)
- Crypto Regulation in the European Union
- Decentralized Finance (defi) Explained