EU Watchdog Plans to Put Leverage Caps for Trading of Cryptocurrencies
EU regulators continue to work on new measures in order to establish new rules for the crypto industry and protect the interest of retail players. As per the latest development, European regulatory authorities are looking to curb leveraged bets on digital assets by introducing limits for exchanges, investment funds, etc.
In a statement on Thursday, May 25, the EU watchdog said that it is working to stop shocks that would jeopardize the financial stability elsewhere. The European Systemic Risk Board made several recommendations ranging from asking all crypto firms to submit regular reports as well as introducing specific rules for some of the biggest players in the space. In its report, the ESRB said:
“Systemic risks could arise quickly and suddenly. If the rapid growth trends observed in recent years were to continue, crypto-assets could pose risks to financial stability.”
Thus, they have proposed a few changes to the recently passed MiCA regulations such as “introducing leverage limits for investment funds exposed to crypto-assets”. Additionally, the ESRB also called for limiting the crypto firm’s ability to lend tokens to its clients, which has been one of the popular ways of making high-leveraged bets. Furthermore, the ESRB asked for setting up high collateral requirements for distributed finance products and stablecoins.
EU And Its MiCA Laws
This development comes just 10 days after the EU Council approved the Markets in Crypto-Assets (MiCA) legislation. The member states of the EU and the European Parliament have collectively adopted MiCA rules which make sure that crypto businesses seek authorization from the EU to serve customers within the bloc.
Additionally, these businesses should also comply with protections to prevent issues of money laundering or terror financing. The EU has come up with MiCA rules finally after a major shakeout in the crypto space and some high-profile collapses happening last year.
The recent recommendations from the ESRB are not bindings but rather shall inform the EU’s future work on the new versions of its crypto assets regulation (MiCA).
- Senators Reaffirm Commitment to Market Structure Bill After Meeting with Coinbase, Ripple
- How the Crypto Market Could React to the Next Fed Meeting on October 29?
- $1.68 Trillion T. Rowe Price Files for First Active Crypto ETF Holding BTC, ETH, SOL, and XRP
- Standard Chartered Predicts Bitcoin Could Drop Below $100K Amid U.S.–China Trade Tensions
- Rising Demand for Verifiable Crypto Ownership Drives Launch of Trezor Safe 7
- XRP Price Classical Pattern Points to a Rebound as XRPR ETF Hits $100M Milestone
- Chainlink Price Eyes $27 Rebound as Whales Accumulate 54M LINK
- Pi Network Price Wedge Signals a Rebound as Key Upgrades Raise Utility Hopes
- Solana Price Eyes $240 Recovery as Gemini Launches SOL-Reward Credit Card
- XRP Price Prediction Amid Evernorth’s $1B XRP Treasury Plan – Can XRP Hit $5?
- Ethereum Price Targets $8K Amid John Bollinger’s ‘W’ Bottom Signal and VanEck Staked ETF Filing
Why Trust CoinGape
CoinGape has covered the cryptocurrency industry since 2017, aiming to provide informative insights Read more…to our readers. Our journal analysts bring years of experience in market analysis and blockchain technology to ensure factual accuracy and balanced reporting. By following our Editorial Policy, our writers verify every source, fact-check each story, rely on reputable sources, and attribute quotes and media correctly. We also follow a rigorous Review Methodology when evaluating exchanges and tools. From emerging blockchain projects and coin launches to industry events and technical developments, we cover all facets of the digital asset space with unwavering commitment to timely, relevant information.
