Regulation
Here is the EU’s radical solution to protect the ecosystem!
9.45am ▪ 3 minute read ▪ by Eddy S.
In a bold move to regulate the cryptocurrency market, the European Union (EU) recently classified maximum mineable value (MEV) as illegal market abuse under the Cryptocurrency Markets Regulation (MiCA). This decision aims to curb sophisticated market manipulation and ensure fair competition among all participants.
Regulatory implications of MEV
MEV is the profit that block producers can earn by reordering, including or excluding cryptographic transactions within a block. This practice can make the system unfair, giving an advantage to those with more resources and technical skills.
The classification of MEV as market abuse could pose significant obstacles to EU-regulated cryptocurrency-related activities. Under the consultation, EU-based companies would be required to identify and report MEV cases as “suspicious reported transactions or orders” (STOR).
Reactions from the cryptocurrency industry
Prominent figures from the cryptocurrency industry suggest various ways to address this problem. Vitalik Buterin recently discussed MEV issues, proposing to reduce MEV through protocols which may hide transaction details until they are confirmed. He also suggested separating transaction proponents from block builders to limit unfair value extraction.
US financial regulators are also aware of this the MEV threat. The United States Department of Justice (DOJ) announced the arrest of two brothers for using the MEV tactic to steal $25 million on Ethereum. They are accused of fraud and money laundering and face potential prison terms of 20 years.
With this regulation, the EU is taking strong measures to ensure transparency and fairness in the cryptocurrency market. As the debate continues on MEV and its impact on network security and trade fairness, the EU positions itself as a key player in the fight against market manipulation in the ecosystem. Trading platforms will have to adapt quickly to comply with the new requirements, which may reshape themselves the future of cryptocurrencies in Europe and beyond.
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Eddy S.
The world has evolved and adaptation is the best weapon to survive in this wavering universe. The crypto community manager at the base interests me in everything that touches or comes close to the blockchain and its derivatives. With a view to sharing my experience and getting to know a domain that I am passionate about, I am the one who writes informative and décontractés a la fois articles.
DISCLAIMER
The views, thoughts and opinions expressed in this article are solely those of the author and should not be relied upon as investment advice. Do your research before making any investment decisions.