Although the implementation of the recently approved Markets in Crypto Assets (MiCA) regulations is likely to be difficult, their coming into force is going to have a positive outcome for everyone in the industry, Przemyslaw Kral, the CEO of the crypto exchange Zondacrypto, has said. Kral also argued that the implementation of these regulations will force non-compliant entities or those that cannot “deliver the required standards” to leave the European Union market.
The Impact of MiCA Regulations on Crypto Industry Participants
In his written answers to questions from Bitcoin.com News, the CEO suggested that the new regulations will ensure incidents such as the collapse of FTX will not recur. In addition, the regulations will stop human trafficking rings or criminal gangs from moving funds via Europe.
Concerning fears that the implementation of MiCA regulations will see crypto firms leave Europe just as some have done in the United States, Kral said much will depend on their objectives. For crypto firms whose objective is to deliver the best service for users, the implementation of MiCA regulations is not going to affect their operations. On the other hand, crypto firms that “prefer to avoid transparency,” MiCA regulations may force them to abandon the European market.
Also, in his answers sent to Bitcoin.com News via Telegram, Kral spoke of how Europe-based crypto exchanges are preparing for MiCA regulations. Below are the rest of the Zondacrypto CEO’s responses to the questions sent.
Bitcoin.com News (BCN): Your crypto exchange is one of Europe’s long-standing digital asset exchanges. Does the approval of MiCA regulation pose a new or unusual threat to Zondacrypto?
Przemyslaw Kral (PK): At Zondacrypto, we have long called for greater regulatory clarity, so we are well-prepared for the new regulation. We have already achieved great success in cementing our positive regulatory stance with licences in several European countries. In our case, we do not need to make any additional preparations as we have long been adapting our activities and even going beyond the legal requirements to ensure that our users feel safe.
BCN: There is no doubt the collapse of FTX in late 2022 has highlighted the importance of corporate governance in the crypto space. The European Commission has said the MiCA regulation aims to support innovation and the uptake of new financial technologies whilst ensuring that investors are protected. In your view, is MiCA balanced?
PK: Although MiCA may be difficult to implement, especially for smaller start-ups, I believe the result will be positive for everyone. Regulatory clarity is good for everyone: institutional and individual investors, users, and companies – everyone can benefit, which will ultimately mean that the European market will grow. But of course, it also means that those companies that can’t deliver the required standards or don’t have the best interests of users at heart will have to leave the EU or change their business model.
BCN: What will change for the crypto customers when MiCA regulations come into force?
PK: From the point of view of customers of regulated exchanges such as Zondacrypto, the changes won’t be very significant or noticeable, as such exchanges already have strict KYC and AML procedures in place. However, users of unregulated or non-compliant exchanges may encounter withdrawal issues and will likely be asked to provide additional information regarding their identity and source of funds.
BCN: What sort of market manipulations and insider dealings do you see today that MiCA seeks to deal with or solve?
PK: The recent collapse of FTX is an example of the kind of risks that can arise from inadequate regulation, and MiCA will go a long way to ensuring that a similar disaster doesn’t happen in the EU. MiCA will also ensure that money moving through EU-based exchanges is not used to fund terrorism, trafficking or similar crimes. With strict procedures and heavy fines for non-compliance, rogue exchanges will no longer be allowed to profit from or ignore criminal activity on their platforms.
BCN: In the United States, critics assert that the approach taken by regulators will result in many crypto firms leaving the country. Do you foresee the MICA regulation having a similar effect?
PK: It all depends on the company and its objectives. If they have the best interests of their users in mind, they will already have some procedures in place to vet users and make sure that no shady activities can happen on their watch. But for those companies that prefer to avoid transparency, leaving the European market may be the only viable option – and I’m sure their regulated competitors will take advantage of the situation to bring more customers into the European market. Those who play fair will win, and those who prefer to resort to dodgy tactics will have to move on.
BCN: How are European crypto exchanges reacting or preparing for the new regulation?
PK: The exchanges that have previously ignored regulatory requirements will need to adapt their procedures to the new legislation, including more thorough vetting processes for users. This can mean more jobs in crypto, as the exchanges will be seeking new specialists to help them process various user verification procedures. And, of course, it will mean more safety and security for everyone involved in the industry.