The European Union has been taking significant steps to regulate the crypto industry, with the introduction of the Markets in Crypto Assets Regulation (MiCAR) being a prime example. Recently, the European Banking Authority (EBA) urged stablecoin issuers to voluntarily comply with consumer protection and risk management measures within a year.

On July 12, the EBA published its first set of measures outlining the MiCAR requirements that will come into effect in a year. These measures include provisions such as permanent rights of redemption and handling complaints. With the approval of MiCAR, which provides a comprehensive set of rules for trading cryptocurrencies such as Bitcoin and Ether, EBA officials are expecting a surge in stablecoin issuance over the next few months. They have called on firms to follow their guiding principles on risk management and good governance before the mandatory rules come into effect.

In addition to these measures, the EU’s European Securities and Markets Authority (ESMA) has set out draft rules for crypto asset service providers (CASPs). These rules aim to authorize CASPs while ensuring the separation of customer assets and trading, in order to prevent any co-mingling of customer and company funds. The ESMA rules are set to come into force by January 2025, but will not include any compensation for customers who lose money invested in unbacked crypto assets.

The EBA’s call for stablecoin issuers to voluntarily comply with consumer protection and risk management measures is an important step towards ensuring the safety and security of the crypto industry. By following these measures, stablecoin issuers can help promote transparency and mitigate the unfair advantage held by certain entities in the crypto market.

However, concerns remain about the potential for abuse and false accusations by individuals referred to as “crypto detectives.” In response to these concerns, EBA CEO Miguel Morel assured participants during a Twitter Space session that the platform would be properly governed and more regulated than social media platforms like Twitter or Facebook. He explained that each bounty would require approval before being posted, adding an extra layer of oversight.

Despite these assurances, concerns about Arkham’s management of user data remain. The company had recently faced backlash for leaking user emails through its weblink referral program, where referral links contained easily decipherable strings of characters that revealed the referring email addresses.

In conclusion, the European Banking Authority’s call for stablecoin issuers to voluntarily comply with consumer protection and risk management measures within a year is an important step towards ensuring the safety and security of the crypto industry. By following these measures and adhering to guidelines on risk management and good governance, stablecoin issuers can help promote transparency and mitigate the unfair advantage held by certain entities in the crypto market. This move by the EBA is part of a larger effort by European regulators to bring regulations to the crypto industry, as evidenced by the swift introduction of the Markets in Crypto Assets Regulation (MiCAR). As the crypto industry continues to grow and evolve, it will be important for regulators to continue to monitor developments and take appropriate action to ensure the safety and security of investors and consumers. By working together, regulators, stablecoin issuers, and other stakeholders in the crypto industry can help create a more transparent, fair, and secure environment for all.