Banco De Portugal Chief Stresses the Need for a Global Crypto Framework
The chief of Banco De Portugal, Mário Centeno, has emphasized that effective crypto regulations require a global framework. He argues that applying the principle of “same-risk, same regulation” is essential to prevent arbitrage in the crypto market. While acknowledging that Europe’s Markets-in-Crypto-Assets (MiCA) regulation is not perfect, Centeno believes it is an important step towards comprehensive crypto regulation and standardizing local rules.
Arbitrage Is Hurting Business, Says One CEO
In a speech at Banco De Portugal’s Financial Stability Conference in Lisbon, Centeno discussed the challenges faced by local regulators in determining rules based on the type of entity or activity. He also expressed uncertainty about whether decentralized finance (DeFi) will truly democratize finance. These views align with India’s Finance Minister Nirmala Sitharaman’s call for a global crypto framework earlier this year.
Earlier this year, Pedro Borges of Mercado Bitcoin Portugal highlighted how his business faced unfair competition from lightly-regulated competitors due to slower regulatory progress in other countries. He emphasized the need for a level playing field.
MiCA Rules Can Work But Need to Be Enhanced
The upcoming MiCA regulations in Europe are expected to improve the situation by applying consistent rules across all EU member states, including Portugal. However, concerns have been raised about MiCA’s classification of significant crypto firms. ECB supervisory board member Elizabeth McCaul suggests future revisions that consider metrics such as trading volume and assets under custody to provide regulators with a global perspective.
Additionally, MiCA currently lacks rules for decentralized finance, which may not immediately impact Portugal’s DeFi constituents. Lisbon has been identified as an important crypto hub attracting crypto nomads due to its zero-tax policy, but changes in government regulations have impacted the influx of foreigners.
Hot Take: The Importance of a Unified Crypto Framework
The calls for a unified global crypto framework by Banco De Portugal’s chief highlight the need for consistent regulations to prevent arbitrage and ensure fair competition. While Europe’s MiCA regulation is a step in the right direction, enhancements are necessary to address classification issues and include decentralized finance. As Lisbon emerges as a significant crypto hub, it is crucial to establish comprehensive and standardized rules that promote innovation while protecting market participants. A global framework would provide clarity and foster trust in the rapidly evolving crypto industry.
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