Just-In: MEV Designated As “Illegal” Market Abuse Under EU MiCA Regulation

The European Union (EU) under the Markets in Crypto Assets (MiCA) regulation has designated Maximum Extractable Value (MEV) as a clear example illegal market manipulation strategy.

ESMA To Frown At MEV Market Abuse

The European Securities and Markets Authority (ESMA) released its third consultation package as it looks to state in clear terms how some claims in the law can be interpreted. This approach is designed to help remove any form of ambiguity in the law whose full implementation is months away.

The MEV attacks the EU is designating is prevalent in the financial ecosystem including the crypto ecosystem. The recently published paper according to Patrick Hansen, Circle’s EU Strategy and Policy Head, gave a defined definition of what MEVs stands for.

“‘The well-known Maximum Extractable Value (MEV) whereby a miner/validator can take advantage of its ability to arbitrarily reorder transactions to front-run a specific transaction(s) and therefore make a profit’ clearly suggests the existence of market abuse,” the reports reads on Page 10.

In order to prevent such attacks, ESMA will look to trading platforms to report such MEV market abuse incidences. While there are intricacies to get this sorted, the regulators are looking to make the provisions of MiCA as comprehensive as it is clear.

MEV is treated as clear example of illegal market abuse by EU draft standards specifying MiCA rules.

ESMA (the EU Securities & Markets Authority) has recently published its third consultation package outlining its proposed technical standards detailing how to implement some of… pic.twitter.com/2CMGKflGw0

— Patrick Hansen (@paddi_hansen) May 27, 2024

As part of its thorough approach, the ESMA also published a 6-page draft to show the template for reporting such suspicious transactions. While not final, this provision might likely see additional modifications over the next few months. The European markets regulator is requesting stakeholder feedback on the propositions with a June 25 deadline to turn in the comments.

EU Looking to Reposition For Business

The EU fight against MEV market abuse and other related market mishaps comes off as one of the avenues the bloc is looking to reposition itself in the capital market.

Per an earlier post on X by Hansen, the European Union has been recording negative trends in several key areas. Amid the dwindling investor capital share, Hansen shared his major worries. He projected that the region may fall behind others like the United States if it does not take proper action.

Amid these claims, Bitcoin, through MiCA implementation might help reposition the bloc as needed.

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