Regulation
Draft EU standards consider MEV a ‘clear example of market abuse’ under upcoming MiCA rules
The European Securities and Markets Authority (ESMA) has carefully examined Maximum Extractable Value (MEV) as a clear example of illegal market abuse under the proposed technical standards for the Cryptocurrency markets regulation (MiCA).
Patrick Hansen, a prominent crypto regulatory commentator, recently highlighted this development on Twitter, underlining the significant implications for the cryptocurrency industry.
MEV monitoring
According to a social media post by Patrick Hansen, a well-known crypto regulatory commentator, ESMA’s draft explicitly states:
“…the known maximum mineable value (MEV) for which a miner/validator can take advantage of his ability to arbitrarily reorder transactions to pre-execute one or more specific transactions and thus make a profit” clearly suggests the existence of market abuse .”
Hansen highlighted that almost all regulated crypto businesses in the EU, including exchanges and brokers, should detect and report cases of MEV through comprehensive “suspicious transaction or order reports” (STOR), with only ESMA’s STOR model It spans six pages.
The proposed standards mandate detailed reporting procedures for MEV detection, raising significant concerns about the manageability of reporting each individual case. Hansen questioned the feasibility of such extensive reporting requirements, considering the complexity and frequency of MEV events in the cryptocurrency market.
Furthermore, ESMA’s draft standards suggest a collaborative approach to enforcement, urging authorities both inside and outside the EU to cooperate to sanction market abuse. This means that actors involved in MEV may face investigations and enforcement actions not only from EU regulators but also from international authorities.
End of consultation
THE consultation package, part of ESMA’s ongoing efforts to refine the implementation of MiCA, includes a wide range of technical standards aimed at improving market integrity and protecting investors. The focus on MEV highlights the EU’s commitment to tackling sophisticated forms of market manipulation in the rapidly evolving cryptocurrency sector.
Hansen highlighted the importance of stakeholder participation in the consultation process, stressing that feedback from those directly involved in MEV and other crypto activities is critical to the development of effective and practical regulatory measures.
ESMA has set a deadline of 25 June for interested parties to submit their feedback on the draft standard.
Once finalized, these standards are expected to play a critical role in defining the regulatory environment for cryptocurrencies in the EU, potentially setting a precedent for other jurisdictions.