Europe Looking to Curb Crypto Commercials
Cryptocurrencies and their trading have increasingly come under more scrutiny in recent years. Given the boom in popularity that the industry experienced, this is unsurprising. Due to the decentralized nature at the very core of the concept, many governments and legislatures have battled with how to treat it. Because of this, some jurisdictions are looking to propose sweeping reforms that will bring the industry into step and introduce some form of regulation. In particular, nations across Europe are keen to ensure that they have a leash on the world of crypto.
As previously reported, the UK government is discussing whether trading cryptocurrencies should be treated as a form of gambling. Gambling support agencies in the country reportedly highlighted increases in addiction to trading digital currencies, likening the process to any other form of gambling or speculation. And now members of the European Union are setting their own boundaries and making calls for greater oversight in what is seen as something of a Wild West market. A number of prominent financial voices in countries such as Ireland are putting their weight behind new regulations, amid requests for even stronger restrictions.
Advertising Top of the Agenda for Irish Financial Chief
In Ireland, change is afoot in a number of markets. Since 2020, a number of harm-reduction measures have been introduced for the alcohol industry, as well as the establishment of a dedicated gambling legislator. Now, however, it appears that those in power have turned their attention to the crypto trading industry as their new cause for concern. Given that its nearest neighbor, the UK, has begun treating this burgeoning industry similarly to how it treats gambling, it’s unsurprising that the conversation has arisen. Both nations’ close proximity and relationship has established a close link when it comes to legislation and political discussion. Now the governor of the Central Bank of Ireland has stuck his head above the parapet to make an argument for strict legislation.
Gabriel Makhlouf has never been a proponent of crypto tokens. Following the demise of FTX in 2022, he spoke out about the difficulties that “unbacked” coins cause for retail consumers. Since then, he has stated in no uncertain terms that he opposes the unregulated trading of tokens. He likened it to gambling, as well as comparing unbacked crypto unfavorably with shady business practices, calling them “Ponzi schemes”. This is a strong stance from a man who has such sway over the financial landscape of a major European player. He has now gone on to make requests that Irish legislators step in and restrict advertising to vulnerable groups. In particular, Makhlouf drew attention to the increasing number of younger people investing in crypto. He told an assembly of Ireland’s Oireachtas [parliament and senate], “If you could find a way, I would recommend that adverts to that cohort are banned”. This would be a groundbreaking change to the oversight of cryptocurrency in the country.
A Wider-European Concern
While much of the discussion around restrictions on crypto trading and its popularity in the EU currently seems to be coming from Ireland; it isn’t restricted solely to the island nation. Gabriel Makhlouf is also a member of the European Central Bank and as such has sway within it. He was complimentary of the EU’s 2022 framework for crypto that aimed to help protect consumer rights in the industry. The proposed legislation would mean that coin exchanges would have to provide some protections against the catastrophic losses that some tokens have experienced since the initial boom. A representative for the EU said of the legislation, “today we put order in the Wild West of crypto assets and set clear rules for a harmonized market”. It’s clear then that there is a groundswell of support for government involvement in trading, even if some industry leaders described the regulations as a “mixed bag”.
While the legislation, known as MiCA, did seem to go against some of the fundamentals of crypto and the blockchain by introducing greater transparency to the process, it has been largely welcomed by those in the industry. It will provide legal certainty to both exchanges and consumers by ensuring that there is a framework in place. Instead of crypto operating entirely independently of the existing financial landscape, it will now work as a peripheral industry. It’s not yet clear whether this will prove to be the start of a new boom for the market, but many will be encouraged by the fact that nations are looking to encourage stability.