The European Union’s flagship cryptocurrency legislation, which was passed in 2023, is set to take effect this year. However, there has been uneven enforcement of pre-existing legislation, according to Jon Helgi Egilsson, the chair and founder of Monerium, a licensed e-money issuer in the region. Egilsson expressed concern about the lack of consistent enforcement and its impact on e-money firms. He noted that issuing e-money requires a license, and failure to obtain one can result in fines and imprisonment. However, not all entities face the same level of scrutiny. Becoming licensed also presents challenges, as it imposes restrictions on what can be done and how it can be promoted, and requires the submission of reports that may be subject to criticism from regulators. Meanwhile, other forms of money, such as stablecoins, operate without the same level of regulatory oversight. This discrepancy in enforcement has raised questions and dissatisfaction among industry insiders. Cointelegraph spoke with Natalia Latka, a policy director and regulatory affairs expert at blockchain analysis firm Merkle Science, who explained that there are two main legal viewpoints in the EU regarding the regulation of electronic money tokens (EMTs) or stablecoins. One viewpoint argues that the EU’s Electronic Money Directive (EMD) applies directly to EMTs, while the other viewpoint considers the new Markets in Crypto-Assets Regulation (MiCA) as the primary legislation for stablecoins. Proponents of the latter viewpoint believe that stablecoins pose additional risks that are not present in e-money and require a bespoke regulatory framework. However, the enforcement of this new framework has not been consistent, which has raised concerns. Despite this, there is optimism that MiCA will be enforced effectively once it comes into full force later this year. However, the legal debate on stablecoins and e-money is far from over, and further clarification and guidance from EU authorities are needed to address the interplay between MiCA and existing financial regulations.
Observers claim that the absence of enforcement weakens EU crypto regulations.