SiGMA Europe 2023 hosted a compelling panel discussion titled “Evolving Regulation in Global Crypto Payments,” tackling the dynamic landscape of cryptocurrency regulation. The panel, moderated by Dave Pulis, Director of ZBX Crypto Exchange, featured industry experts Richard Mifsud, CEO of Xprizo; Marina Ioannou, Compliance Advisor at Sumsub and Ian Dawson, CEO of ZBX (article image photo in order from left).

MiCA regulation takes centre stage

The discussion opened with a critical question: will crypto regulation mirror traditional financial systems, or can it be crafted to encourage innovation without stifling growth? The panelists highlighted the imminent impact of the Markets in Crypto Assets (MiCA) regulatory framework in the EU.

Marina Ioannou explained that MiCA represents a significant step towards consumer protection, anti-terrorist financing, and prevention of tax evasion. While the initial emphasis was on technology, MiCA now prioritizes regulations safeguarding consumers’ interests and overall market integrity. The overarching goal of MiCA is to enhance transparency, certainty, and establish a unified regulatory framework within the EU.

Key Provisions of MiCA

• The EU’s MiCA framework introduces several pivotal provisions:
• Licensing and Passporting: Entities can obtain a license, authorization from relevant regulators, and leverage a passporting regime to extend services to other EU member states.
• Marketing Communications: Stricter rules aim to provide fair and transparent information to potential clients.
• Capital Requirements: Entities must cover client funds adequately, ensuring financial stability in case of insolvency.
• Auditing and Preventive Measures: Regulated entities must undergo audits, segregate client funds from corporate funds, and establish robust procedures, including IT security and anti-money laundering policies.

Alignment with MiCA

Ian Dawson, CEO of ZBX, shared insights into ZBX’s application for a license in Malta, emphasizing Malta’s alignment with MiCA. Despite Malta’s reputation for rigorous regulations, Dawson argued that such stringent measures are essential to prevent bad actors, citing the FTX incident as an example.

Emerging Markets and Diverse Regulations

The discussion shifted to the unique regulatory challenges in emerging economies, with Xprizo CEO Richard Mifsud highlighting the distinct needs of regions like Africa, Latin America, and Asia. Mifsud praised the UAE for its proactive approach to integrating crypto into the ecosystem and emphasized the importance of educating local authorities in emerging markets.

Tailoring Regulation to Local Needs

Mifsud emphasized the need for each jurisdiction to tailor regulations according to its unique needs, cautioning against a one-size-fits-all approach. He urged regulatory bodies to consider the challenges faced by unbanked populations and avoid imposing regulations that may hinder financial inclusion.

Travel Rule Implications

The panel delved into the Travel Rule, acknowledging its role in shaping global crypto payments. The Travel Rule requires regulated entities to identify the originator and beneficiaries in crypto transactions and exchange such information. Concerns were raised about the lack of adequate resources in developing nations to comply with the travel rule. this would exacerbate the problem of financial inclusivity in developing jurisdictions even further.

Looking Ahead: Harmonizing Regulations

In closing, the panelists anticipated a harmonization of crypto regulations but stressed the importance of considering end-users in addition to the regulatory framework. They predicted a decline in crypto regulation arbitrage and emphasized the need for a nuanced approach that respects the specific needs of each jurisdiction.

The crypto panel provided valuable insights into the evolving regulatory landscape, emphasizing the delicate balance between innovation and consumer protection. As the crypto industry continues to mature, collaboration between stakeholders and regulators becomes crucial for ensuring a sustainable and inclusive future.

Join us in Dubai between the 25 and 27 February 2024

The fourth edition of SiGMA Eurasia expo will once again be held at the InterContinental Dubai Festival City, providing invaluable opportunities for attendees to network with industry professionals, gain exposure to the latest tech and innovations in the sector, meet key decision makers, and gain insight into new markets. Find all the details here.