A recent report commissioned by Eventus and conducted by Acuiti sheds light on the anticipated impact of the European Union’s Markets in Crypto Assets Regulation (MiCA) on cryptocurrency trading surveillance. The report, titled “The Impact of MiCA on Crypto Market Surveillance: Insights and Challenges,” is based on interviews with senior executives from 68 firms involved in crypto trading.
MiCA Compliance: Progress and Challenges
MiCA represents a pioneering regulatory framework within a major financial jurisdiction, setting stringent requirements for market participants. Similar to the EU’s Market Abuse Regulation (MAR), MiCA is driving the industry towards establishing comprehensive market surveillance systems. Despite the progress, the report indicates significant gaps in compliance readiness:
- Full Compliance: Only 9% of surveyed firms fully comply with MiCA requirements.
- Lack of Preparation: 25% of firms have yet to commence preparations.
As the implementation deadline approaches at the end of the year, firms are urged to ascertain their regulatory scope and initiate compliance measures promptly.
Key Insights from the Report
Ross Lancaster, Head of Research at Acuiti, highlighted several findings:
- Growing Sophistication: There is an increasing sophistication in market surveillance practices, even among firms initially excluded from MiCA’s scope. Notably, 57% of these firms already employ robust surveillance systems.
- Third-Party Assistance: Many firms are turning to third-party vendors for compliance support, especially those not previously operating under MIFID II. Lancaster noted the significant operational lift required for compliance and the relative lack of awareness in some market areas regarding MiCA’s scope.
Lancaster emphasized the necessity for firms to promptly address these gaps to meet the compliance deadline.
Outsourcing Trends and Compliance Costs
The study also highlights consultations on MiCA’s final technical standards, revealing varying stages of readiness among affected firms:
- Preparation Stages: 25% of firms have not yet initiated preparations, while others are at different readiness levels.
- Outsourcing Plans: 64% of firms plan to outsource system development, facing challenges in selecting suitable vendors and allocating resources effectively.
Key concerns for firms include:
- Compliance Costs: Significant financial investment required for compliance.
- Qualified Personnel: Difficulty in securing skilled professionals to manage compliance processes.
These concerns reflect broader industry adjustments to new regulatory mandates. As regulations evolve, industry leaders must adapt to the new rules under MiCA.
Insights from Industry Leaders
Eventus CEO Travis Schwab shared insights on the industry’s regulatory landscape:
- Significant Investment: Eventus has invested heavily to meet the sector’s needs, including the capability to handle real-time alert generation covering billions of messages per day, 24×7.
- Global Trends: Schwab noted that regulation in the EU is just the beginning, with new regulatory guidelines expected in jurisdictions worldwide in the coming years.
The report underscores the critical need for firms involved in crypto trading to prioritize MiCA compliance. As the deadline approaches, the industry must navigate challenges related to compliance costs, qualified personnel, and vendor selection. Strategic partnerships and investments in sophisticated surveillance systems will be crucial for firms to meet regulatory standards and maintain market integrity.
This collaborative effort between NexeraID and Galileo Protocol, alongside insights from Eventus and Acuiti, exemplifies how the industry can address these challenges, fostering a secure and compliant environment for digital asset trading.
Source: financemagnates.com
