German Federal Financial Supervisory Authority (BaFin) official Stephan Mögelin issued a warning on the second day of panel discussions at the European Blockchain Convention. The prospect of centralizing crypto supervision at the European Union level was deemed counterproductive, as it risks reducing operational flexibility for crypto-asset service providers (CASPs) on the ground.
Mögelin addressed the proposal to transfer regulatory authority from national bodies to a centralized agency. Under the current Markets in Crypto-Assets (MiCA) framework, firms licensed by a single national regulator can leverage operational passporting rights. This single passporting regime is critical for cross-border expansion, allowing CASPs to operate legally across 30 European Economic Area (EEA) member states with a single authorization.
Lessons from European Derivatives Regulations
BaFin’s concerns stem from past regulatory experiences across the region. Mögelin cited lessons learned from the rollout of the European Market Infrastructure Regulation (EMIR) for derivatives. The centralization of authority under derivatives market rules serves as a clear example of how centralized oversight can create fresh hurdles for the industry.
Shifting oversight from member state regulators to a central authority threatens to create redundant workloads. Crypto firms that have already satisfied compliance requirements at the national level risk facing duplicate red tape. Rather than streamlining the process, centralizing authority undermines the practical benefits provided by MiCA’s passporting mechanism.
What Are the Market’s True Priorities?
In response to the push for centralized authority, BaFin advocated for a pragmatic approach grounded in market realities. Mögelin urged European regulators to account for actual market needs before overhauling the existing supervisory structure.
Policy focus must center on client needs and the operational efficiency of digital asset service providers. Altering the licensing model without a thorough assessment risks sacrificing flexibility - a vital ingredient for the growth of the digital asset ecosystem across the continent.
Reported by crypto.news.
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Disclaimer: This article is for informational and educational purposes only, not financial advice. Cryptocurrency assets are highly volatile and carry significant risk. Always do your own research (DYOR) and never invest more than you can afford to lose.
