Story highlight
- The European Union became the world’s first jurisdiction to have a tailored regulatory framework for cryptocurrencies.
- The EU launched MiCA which seeks to regulate the wild world of cryptocurrencies and bend them to the will of existing and new EU financial laws.
- Ecowas can learn from the success of EU’s MiCA by creating a similar regulatory framework for crypto projects within its jurisdiction.
The European union last week decreed a rule that threatened the position of stablecoins within its jurisdiction. Europe’s Market in Crypto Assets regulation (MiCA) has stated that unregulated stablecoins would not be allowed to trade in the European Union. This is a result of a newly passed bill now turned law by MiCA.
The European union through MiCA is pushing for an adoption of Euros for stablecoins and major crypto platforms are expected to comply.
Tether (USDT) CEO Paolo Ardoino has stressed that the development from the EU is going to be a problem for his company.
Binance CEO Richard Teng has said that his platform is going to be complying with the new EU rules by delisting various unregulated stablecoins for European users.
The management of other top crypto exchanges like Kraken and OKX all agreed to double down on unregulated stablecoins.
The MiCA bill states that the issuing and minting of stablecoins should only be done by banks and electronic money institutions.
In reaction to the news from Europe’s MiCA, Nigerian crypto market analyst Rume Ophi stated that it’s a positive development that jurisdictions have started putting themselves first as regards to crypto projects and by doing that protecting their local currencies.
In an exclusive interview with Nairametrics, Rume Ophi opined what Ecowas can learn from Europe’s MiCA and the many advantages a regulatory framework by Ecowas would have on Ecowas member states as regards cryptocurrency.
What Ecowas Can Learn from MICA
According to Rume Ophi, The Economic Community of West African States can borrow a leaf from the European Union’s MiCA in putting together a regulatory framework for crypto projects in its 15 member countries.
In an exclusive interview with Nairametrics, Rume Ophi highlighted three ways Ecowas member countries could benefit from a regulatory framework for cryptocurrency designed and championed by Ecowas.
This comes as a backdrop to the Nigerian president Bola Tinubu being the current head of Ecowas.
Rume stated that ECOWAS can establish these three main outcomes by simply coming up with a general regulatory framework within its jurisdiction.
Fight Money Laundering and Terrorism Financing
Money laundering was listed as one of the key pitfalls of Binance by Nigerian authorities in their ongoing spat. Ecowas can straighten out the fight against money laundering by having a set of regulatory frameworks that holds across all member states of the union.
In having one single set of guidelines across member states it makes it easier to track money laundering carried out by Crypto entities within the Ecowas Bloc.
Terrorism remains a hotbed issue within the Ecowas bloc and crypto has been accused of being a tool for financing terrorism.
“Terrorist groups like ISWAP and Boko Haram have held sway in West African countries and Crypto has been namedropped as a tool for funding some of this groups” Rume said
Having a clear regulatory framework for crypto entities within its bloc would make it easier to track any such cases of terrorism financing by authorities.
Encourage Investors within its Bloc
A general regulatory framework for all Ecowas member states would go a long way to provide potential crypto investors with regulatory clarity.
“If Ecowas creates its own set of rules for crypto projects, it will make it easy for investors to invest in Ecowas member states without having to comply with rules from various countries separately” Rume added
Regulatory clarity has been cited as one of the major drawbacks for crypto investors in the global scene. Ecowas having its own crypto regulatory framework would solve that challenge and encourage more investors to set up shop in Ecowas member states.
Protect local currencies from manipulation
Crypto exchanges have been accused of being a key accessory in local currency manipulations leading to the devaluing of said currencies. Rume opined that a stable coin for ECOWAS member states can help prevent currency manipulation and devaluation.
“A Stable coin issued by Ecowas across board for Ecowas member states will shield the local currencies of countries within the union from manipulation and outright devaluation.” Rume added
Ecowas can replicate the European union’s success with MICA in dealing with the crypto industry within its jurisdiction. This could also go a long way in driving crypto currency adoption within the Ecowas bloc.
What to know
- Some parts of the Ecowas bloc have very stringent or outright ban of cryptocurrencies in their countries. Countries like Sierra Leone outrightly banned crypto currencies and an overall regulatory framework by Ecowas could help ease such measures in such countries.
- MiCA is a governing body with the task of providing rules and regulations guiding the world of cryptocurrencies in Europe.
- The European Union’s Markets in Crypto Assets regulation, MiCA, was created by the European Union making the EU the world’s first major jurisdiction with a tailored and comprehensive crypto law
- MiCA’s 150-page working document stresses that any company seeking to offer crypto services within the bloc will need to be authorized by one of the EU’s 27 national financial regulators.