"We need to put more thought into imagining what international
coordination will look like and how it can be effective in regulating
the crypto world," said Elizabeth McCaul.
Elizabeth McCaul, a supervisory board member of the European Central
Bank (ECB), has called for additional oversight of crypto firms
operating in a borderless state outside typical attempts at supervision.
In an April 5 blog post, McCaul said
there was currently no adequate regulatory or supervisory framework for
crypto firms, but the collapse of the FTX exchange helped shed light on
the problem. She called on policymakers to address potential gaps in
existing frameworks which could lead to bank failures, citing the
collapses of Silicon Valley Bank and Signature Bank in the United
States.
“In the crypto world [...] The very concept of borders and
jurisdictions is being challenged,” said McCaul. “How can we supervise
firms that have no physical borders? We need to put more thought into
imagining what international coordination will look like and how it can
be effective in regulating the crypto world.”
According to McCaul, a framework governing crypto
proposed by the Financial Stability Board and the Basel Committee on
Banking Supervision was “very much in its infancy,” expected to go into
effect in 2025. Pending laws, including the Markets in Crypto Assets
framework, could effectively complement those from the BCBS in Europe,
but likely wouldn’t completely address supervision of crypto firms
claiming no headquarters.
“Exchanges like FTX conduct
their operations by leveraging a group structure, while MiCA applies
only at the individual entity level. In my view, large players like FTX
or Binance need a consolidated approach, even if this requires
adjustments to existing legislation.”
Related: ECB official urges CBDC development for the good of cryptocurrency and consumers
The ECB is currently investigating the potential impact of a digital euro
on the European Union’s financial system, including policy issues and
how the token could provide payment solutions for retail users. In
January, ECB executive board member Fabio Panetta addressed the European Parliament, outlining a plan for a digital euro to be used alongside cash in retail payments.
Magazine: Unstablecoins: Depegging, bank runs and other risks loom
source link : https://cointelegraph.com/news/crypto-firms-needs-to-be-supervisable-says-ecb-board-member
