The European Union’s financial stability regulator has said that new regulations are needed to regulate major cryptocurrency systems and smart contracts, warning that the digital asset and DeFi sectors are at risk and developments could pose systemic risks to the economy.
The European Systemic Risk Board (ESRB), chaired by EU Central Bank President Christine Lagarde, said at Thursday’s A report warns of the risks of cryptocurrency lending and collateralization and high leverage in the digital asset market.
“DeFi developers may need to comply with specific regulations regarding the design and creation of smart contracts,” the report said. It provides mandatory code inspections, intellectual property restrictions, and “oracle” rules for transferring real-world data to automated software.
While MiCA imposes governance, licensing, and reserve requirements on players such as wallet providers and stablecoin issuers, it leaves out areas such as crypto lending and staking — although the report warns that these industries could be “significantly important to consumers.” risk”.
Firms will have to manage conflicts of interest within their business under the MiCA – however, the ESRB says there are no overarching requirements to identify and mitigate operational or reputational risks that may arise from providing services such as trading and custody.
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According to Coindesk