The decentralized token exchanges are going through multiple money laundering and scams. The whole crypto market becomes unsafe day by day. Due to a lack of regulations, the incidents take place. The European Union’s Security watchdog is preparing to start scrutiny of the crypto transactions. The watchdog is prepared to supervise the crypto market related to the EU states. The rules and regulation initiative is named ‘Wild West. The authority will observe the transaction with an in-depth methodology to prevent crimes like money laundering.
The regulation plan was approved by the authority last month. Now, it has started to implement regulations on crypto firms. The EU has agreed to take the groundbreaking rules and the EU securities start to make them in force.
Overview Of The ‘Wild West :
The rules and regulations are all about licensing the crypto firms. The desired crypto assets firms will be provided licenses by national regulators. It will be done in 27countries of the EU. The regulators will license the crypto firms. Within a specific schedule, the crypto firms will be able to be under the regulations.
For the ‘wild west’ initiative the security watchdog will need all data from the related crypto firms. The authority will keep its eyes on both sides of the transaction. The watchdog has issued a public procurement request to the company to share all transaction data. The data will include trading data and derivatives. But it will exclude transactions from blockchain or distributed ledger technology.
This raw information will assist the watchdog to detect wrong deeds such as money laundering, phishing scam, hacking, etc. Both sides of the transactions will be monitored by the watchdog authority. Through the provided data they will be able to detect the misleader. Also, it will take the responsibility to find the center of accumulation of risky positions when it would act against the market. The regulation aims to avoid risky trading in the crypto market and balance transparency in the market through the cooperation of crypto firms.
The Rules :
According to the rules which firms would want to issue or sell tokens, they have to get a license from the regulator of the region. That license will allow us to operate the activity under surveillance. The national regulator will serve the license to the whole 27-state bloc over the country. It will take a specific time to get the license.
The rules will apply to the stablecoins which are also known as pegged USD. Apart from stablecoins, it will regulate the traditional currencies or commodities that aim to keep their price steady. The license will be approved 12 months after the application. Other tokens will be approved 18 months after it starts.
All crypto firms have to be licensed without any biases. Even the firms who already comp[ly with anti-money laundering, also have to be regulated within 18 months. The EU security rules are going to be neutral to all the crypto firms. The data has to be also fair that would be provided by the firm itself.
Primary Issue :
One of the primary reasons to take the regulations into force is the stablecoins. When TeraUSD, Luna fell in the market, which massively affected the other existing coins. The holders suffered to get back their assets. But the EU ‘wild west’ will provide the right to the holders to get back their assets in such a situation without any cost.
Other Countries :
Other than the EU, Japan has made a landmark by forcing the exchanges to register with the financial watchdog. Also, the US planned to serve the rules to the US-based crypto firms in April this year. But it would not happen. Though it is in consideration to regulate their crypto firms.