Stefan Berger, a member of the European Parliament’s Economics Committee, compared the current situation with FTX to the 2008 financial crisis, using “such Lehman Brothers moments” to justify the need for crypto regulation.
In a November 9 tweet, Berger said proper regulation was needed to avoid issues that are “costing huge trust” in the crypto space, amid financial difficulties reported by FTX. The member of the parliamentary committee pointed to the framework for crypto-asset markets, or MiCA, currently under consideration by the European Council as a means of requiring that crypto companies “guarantee internal risk management mechanisms “.
Shame! The #FTX/#Alameda the affair cost a great deal of trust. Such Lehman Brothers moments should be avoided in the crypto space. That’s exactly what #Mica is for. Crypto assets are not play money. Crypto-asset service providers must ensure internal risk management mechanisms. https://t.co/zNrB8CdUbU
— Stefan Berger (@DrStefanBerger) November 9, 2022
“The FTX case clearly shows the dangers involved in a completely unregulated crypto market and unlicensed crypto exchanges,” Berger said in a written statement to Cointelegraph. “We still have a large number of crypto-asset service providers whose concept is not understandable. MiCA solves exactly this problem. With a global MiCA, the FTX crash would not have happened.
“The crypto space is not a casino. The crash of a $30 billion exchange like FTX destabilized the entire market […] Regulation is a good tool to restore confidence in a struggling market.
Berger’s statement about ‘shaming’ FTX and Alameda Research came ahead of crypto exchange Binance announcing on November 9 that he did not intend to acquire the business. Changpeng Zhao, CEO of Binance, and Sam Bankman-Fried, CEO of FTX has spoken publicly in favor of an agreement between the two major exchanges on November 8 in an attempt to resolve the “liquidity crisis” reported by FTX. The current situation with FTX has caused volatility in the crypto market and some lawmakers claiming regulatory clarity.
Related: Why is the crypto market down today?
On October 10, the Economic Committee of the European Parliament accepted the MiCA legislation, the result of trilogue negotiations between the Council of the EU, the European Commission and the European Parliament. The bill aims to create a consistent regulatory framework for cryptocurrencies among the 27 member states of the European Union. EU lawmakers still need to do legal and linguistic checks, approve a final version of the bill and publish MiCA in the EU newspaper, but the policy could come into force as early as 2024.