MiCA proponent cites FTX in advocating for regulation: ‘Crypto assets are not play money’

European Parliament economics committee member Stefan Berger has compared the current situation with FTX to the 2008 financial crisis, using “such Lehman Brothers moments” in justifying the need for regulating crypto.

In a Nov. 9 tweet, Berger said proper regulation was needed to avoid issues which “cost enormous trust” in the crypto space, amid FTX reporting financial difficulties. The parliamentary committee member pointed to the Markets in Crypto-Assets, or MiCA, framework currently moving through the European Council as a way to require crypto firms to “ensure internal risk management mechanisms.”

Shame! The #FTX/#Alameda case has cost enormous trust. Such Lehman Brothers moments must be prevented in the crypto space. That’s exactly what #MiCA is for. Crypto assets are not play money. Crypto asset service providers must ensure internal risk management mechanisms. https://t.co/zNrB8CdUbU

— Stefan Berger (@DrStefanBerger) November 9, 2022

“The FTX case makes it clear what dangers a completely unregulated crypto market and crypto exchanges without licenses entail,” said Berger in a written statement to Cointelegraph. “We still have a large number of crypto asset service providers whose concept is not understandable. MiCA addresses exactly this problem. With a global MiCA, the FTX crash would not have happened.”

He added:

“The crypto space is not a casino. The crash of a $30 billion exchange like FTX has unsettled the entire market […] Regulation is a good tool to restore confidence in the ailing market.”

Berger’s statement on the “shame” of FTX and Alameda Research came prior to crypto exchange Binance announcing on Nov. 9 it did not intend to acquire the firm. Both Binance CEO Changpeng Zhao and FTX CEO Sam Bankman-Fried publicly came out in support of a deal between the two major exchanges on Nov. 8 in an effort to address FTX’s reported “liquidity crunch.” The ongoing situation with FTX has led to volatility across the crypto market and some lawmakers calling for regulatory clarity.

Related: Why is the crypto market down today?

On Oct. 10, the European Parliament economics committee accepted the MiCA legislation, a result of trialogue negotiations between the EU Council, the European Commission and the European Parliament. The bill aims to create a consistent regulatory framework for cryptocurrencies among the 27 European Union member states. EU lawmakers still need to conduct legal and linguistic checks, approve a final version of the bill, and publish MiCA in the EU journal, but the policy could go into effect as early as 2024.