EU Regulators Seek Stronger Crypto Market Framework ∞ Markets

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Briefing

French, Austrian, and Italian market authorities are advocating for a more robust European framework for crypto-asset markets, signaling an ongoing evolution in regulatory oversight. This move comes after the Markets in Crypto-Assets (MiCA) regulation, fully in effect since December 2024, revealed inconsistencies in national supervision, prompting calls for stricter rules on foreign platforms and mandatory cybersecurity audits to bolster investor confidence.

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Context

Before this announcement, many in the crypto space wondered if the recently implemented MiCA regulation would provide sufficient clarity and stability for the European market. The expectation was that MiCA would harmonize rules, but questions remained about its practical application and whether it would truly address the complexities of a rapidly evolving digital asset landscape. Market participants were looking for signs of how the new framework would be enforced and if it would truly level the playing field.

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Analysis

This push for stronger regulation is a direct response to the initial application of the MiCA framework, which, despite its comprehensive nature, has exposed “major differences” in how national authorities supervise crypto markets. Essentially, while MiCA laid down a foundational rulebook, the interpretation and enforcement across different EU countries have varied. This inconsistency creates potential loopholes, particularly concerning platforms operating outside the EU but targeting European investors, and raises concerns about cyber risks.

Think of it like a new set of traffic laws ∞ everyone agrees on the rules, but if different police forces interpret speeding differently, some drivers might still push the limits. To address this, authorities are proposing targeted changes, including requiring intermediaries to use MiCA-compliant platforms and mandating independent cybersecurity audits for authorization, aiming to ensure uniform market integrity and investor protection.

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Parameters

MiCA Application Date ∞ December 30, 2024 – The date when the Markets in Crypto-Assets (MiCA) Regulation fully came into effect, marking the start of its comprehensive application across the EU.
Key Regulatory Concern ∞ Inconsistent National Supervision – The primary issue identified, where different EU national authorities are supervising crypto markets with varying approaches despite MiCA.
Proposed Measure 1 ∞ Stricter Rules for Foreign Platforms – A call to ensure platforms operating outside the EU but serving European clients adhere to MiCA-equivalent standards.
Proposed Measure 2 ∞ Mandatory Cybersecurity Audits – A recommendation for independent cybersecurity audits as a prerequisite for MiCA authorization and periodic renewal, addressing cyber risk.

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Outlook

In the coming weeks and months, market watchers should observe how the European Securities and Markets Authority (ESMA) and other national competent authorities respond to these calls for stronger frameworks. Any concrete legislative proposals or updated guidance that emerges will indicate a further tightening of the regulatory environment. Specifically, look for discussions around harmonizing supervisory practices and implementing more stringent requirements for market entry and operational security, which could impact how crypto-asset service providers operate across the EU.

The EU’s crypto regulatory framework is evolving beyond its initial MiCA implementation, signaling a move towards stricter, more harmonized enforcement to protect investors and ensure market integrity.

Signal Acquired from ∞ AMF France