- Global crypto adoption remains low.
- Legal expert Karolis Jonuška contends that regulations like MiCA can catalyze crypto.
- Nonetheless, Jonuška cautions that the outcomes of crypto enforcement cases in the U.S. will also have ripple effects.
Despite continued developments in the crypto space, the industry is still waiting for its big break into mainstream adoption, with Triple-A data placing the global adoption rate at just 4.2%.
The stunning collapses of the behemoths FTX and Terra have only helped fuel the crypto “wild west” narrative championed by U.S. SEC Chair Gary Gensler, as those outside the industry continue correlating the industry with scams and volatile speculative movements.
However, the industry’s horizons are bright.
In an interview with DailyCoin ahead of his appearance at Web3 Summit Vilnius 2023 on November 9, Head of Legal at swissmoney and iSun Karolis Jonuška talked about how regulations like the EU’s Market in Crypto-Assets (MiCA) could be the turning point the crypto industry needs to fix its reputation and appeal to a wider audience.
MiCA to Boost Adoption
Europe’s landmark regulatory framework introduces requirements to make crypto companies more transparent and accountable. As highlighted in a consultation paper from the European Securities and Markets Authority (ESMA), the new requirements will include:
- Record-keeping requirements for crypto-asset service providers (CASPs).
- This provision details how crypto firms are expected to keep records of order and transaction data, which will be released to supervisory agencies and clients at request.
- Trade transparency requirements.
- This requires firms to make trade data available to users in real time.
- Continuity and regularity requirements.
- This details security measures to maintain orderly markets, shield customers from undue losses, and address operational risks.
In response to questions about MiCA’s impact, Jonuška contended that security guarantees introduced by the legal framework’s transparency requirements would likely help crypto reach a wider audience, especially the unbanked.
“If we want to approach this wider audience [non-crypto natives and the unbanked], we have to take this maturity step [embrace regulations like MiCA]. MiCA will allow us to, in a compliant and clear way, approach this audience. Up to this point, they have basically been left on the sidelines,” he told DailyCoin.
Jonuška further addressed concerns around MiCA, particularly the controversial travel rule that passed along with the legislation in April 2023. The travel rule requires that exchanges report all withdrawals and deposits exceeding €1,000.
While many in the crypto space have tagged the travel rule as burdensome and argued that it raised privacy concerns, Jonuška suggested it can be considered a necessary evil.
“Mentioning the travel rule, these [guidelines] have been available for a long time in a traditional finance space. We have it in that space, and we have to adopt it in this space.
If we want innovation in IT and financial technologies, development with few repercussions or responsibilities will have to stop,” he noted.
But while regulations like MiCA fuel optimism about mass adoption, crypto enforcement cases in the U.S. continue to stoke the flame of uncertainty. Can there be mainstream crypto adoption if regulators in a world power like the U.S. remain hostile?
All Eyes on the U.S.
The number of enforcement actions against high-profile crypto firms has spiked in the U.S. as the SEC ramps up efforts to control the burgeoning industry. Major lawsuits include cases against Binance, Coinbase, and Kraken.
Binance and Coinbase are charged with allegedly operating unregistered security exchanges, brokers, and clearing agencies.
The SEC also forced Kraken to end its staking service for American users as part of a settlement deal, as the agency claimed that the service represented an unregistered securities offering.
Even aside from these hard hitters, the agency’s lawsuit against Ripple, which claims that the XRP token is a security and, as such, describes the firm’s sales as that of unregistered security offerings, has dragged on for over two years as the Gary Gensler-led SEC maintains that traditional securities laws are enough to guide the crypto markets.
Speaking on the global impacts of the lawsuits, swissmoney’s Jonuška asserted that “everybody’s eyes are on [the] United States of America.”
According to him, the recent enforcement actions have the potential to impact investor sentiment and shape global crypto regulations, especially for regions that have so far chosen to remain on the fence.
“For the cases that are going on, I think that yes, indeed, if the outcome is going to be negative or positive, [global] legislators will take note of that. I think that will be for the countries that are on the sidelines right now, especially around the world, that have not really enacted a clear regime for crypto assets.
Those that still have not regulated some aspects of it [the crypto industry] will also take inspiration from that, for sure,” Jonuška explained.
Areas where these impacts are expected to be most visible include crypto asset classifications and registration requirements for crypto firms.
Web3 Summit Vilnius, 2023
Web3 Summit: Impact the Economy powered by swissmoney is Europe’s premier crypto, Web3, and blockchain conference. Poised to transform how Europe uses the technologies of tomorrow on November 9th, Web3 Summit 2023 will bring together the brightest minds from across the Web3, tech, and financial industries as global government officials, Fintech firms, developers, promising startups, crypto investors, and miners work to shape the future.
Karolis Jonuška is set to speak at the event. The Head of Legal at swissmoney will participate in a panel to debate how crypto changes traditional finance engines and to what extent the great systems will be integrated.
On the Flipside
- Aside from the EU, the U.K. and multiple regions in the Middle East are working to drive crypto adoption through clear regulations.
- U.S. lawmakers are working on multiple bills to bring clarity to the crypto industry.
Why This Matters
Comments from Jonuška highlight the role of clear regulations like MiCA in building confidence in the crypto market. However, as highlighted by the swissmoney Head of Legal, it is worth keeping an eye on the outcomes of regulatory efforts in the U.S.
Read this to learn more about the U.S. SEC’s stance on crypto:
Gary Gensler Makes Demand for More Accountability in Crypto
Learn more about how Europe is driving inflows to crypto funds:
Crypto Extends Inflow Streak as European Dominance Continues