The “questionable practices” at now collapsed crypto exchange FTX would not have been allowed to happen under European Union rules that need to be finalised urgently, a senior European Commission official, reports RTE News.
The crash in bitcoin led to a “crypto winter”, which saw the collapse of crypto exchange FTX, and earlier this week cryptocurrency lender BlockFi filed for bankruptcy protection, says the report.
The European Union has reached agreement on groundbreaking markets in cryptoassets rules (MiCA) for licensing and supervision, expected to come into effect in 2024 and putting the bloc at the forefront of regulating a sector which has shrunk dramatically.
But Alexandra Jour-Schroeder, deputy director general at the Commission’s financial services unit, said it was a matter of urgency to complete approval of MiCA with a final vote in the European Parliament.
There were questionable practices at FTX where there was no proper record keeping or separation of customer and company accounts, she said, adding that about 10% of the company’s customers were in the bloc.
“All these failures are very serious. We don’t see them as failures of blockchain or crypto assets per se,” Jour-Schroeder told a European Parliament hearing.
“Under the MiCA regime, no companies providing cryptoassets in the EU would have been allowed to be organised, perhaps it’s better to say disorganised, in the way FTX reportedly was.”