FTX collapse shows need for EU crypto oversight, lawmaker says – BNN Bloomberg

(Bloomberg) – The European Union should step up oversight of digital currencies to avoid a situation where crypto crises like the collapse of the FTX exchange can pose systemic risk, a key European lawmaker has said.

The risk of crypto spillover is low at the moment, but the market has grown exponentially, said Irene Tinagli, Member of the European Parliament.

“We have to watch what is happening very carefully and try to put in place regulations that would prevent this from exploding out of proportion and becoming a systemic threat,” said Tinagli, who chairs the Economic and Monetary Affairs Committee. in an interview Tuesday on Bloomberg Television.

The bloc has reached a preliminary agreement on its first major crypto regulatory proposal, known as Markets in Cryptoassets, or MiCA, which would address the oversight of service providers, as well as consumer and security protections. environmental safeguards for cryptoassets such as Bitcoin and Ether. A final vote on the directive is scheduled for February. If passed, the EU will be the first major jurisdiction to introduce such regulations.

Tinagli said it was unclear whether MiCA could have prevented the collapse of crypto exchange FTX Group, adding that the issue will be discussed in a public hearing at its committee on Wednesday.

“We are still trying to understand and find out what really happened and whether the tools we negotiated just a few months ago and are about to vote in plenary would have been enough,” she said. declared.

However, while the directive would not have prevented FTX from going bankrupt, it is important to take a phased approach now by putting the rules into effect, she said.

“It’s important to have something in place now,” Tinagli said in a separate interview, noting that reopening negotiations at this stage would cause a delay of at least a year. “It will not be wise to reopen the MiCA because it is good legislation”

–With the help of Jorge Valero.

©2022 Bloomberg LP

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