As a seasoned crypto investor with a keen interest in regulatory developments, I find the EU’s stance on Maximum Extractable Value (MEV) as market abuse to be a positive step towards ensuring fairness and transparency in the financial ecosystem. The ESMA’s clear definition of MEV as market abuse in its recent consultation package is a welcome move that helps clarify ambiguities and sets clear standards for trading platforms and market participants.
Under the European Union’s (EU) new Markets in Crypto Assets (MiCA) regulation, Maximum Extractable Value (MEV) is identified as an illicit market manipulation technique.
ESMA To Frown At MEV Market Abuse
The European Securities and Markets Authority (ESMA) has published its third round of consultations, aiming to provide clarification on certain legal provisions. By doing so, ESMA intends to eliminate any potential uncertainty surrounding these laws, which are set to take effect in the coming months.
In the financial and crypto markets, Market Making and Execution (MEV) attacks are commonly observed. A recent paper clarified the meaning of this term, as explained by Patrick Hansen, the EU Strategy and Policy Head at Circle.
On page 10, the report states: “The concept of Maximum Extractable Value (MEV), which allows miners/validators to manipulate transaction ordering for their gain by front-running specific transactions, strongly implies the occurrence of market manipulation.”
To prevent Market Value Equity (MEV) abuse incidents, ESMA intends to require trading platforms to report such occurrences to regulatory authorities. Though there are complexities involved, the goal is to ensure that the regulations outlined in MiCA are both thorough and unambiguous.
As a researcher studying financial markets, I would describe it this way: According to the EU’s draft regulations for MiCA (Markets in Crypto-Assets), MEV (Minimum Viable Exchange) is considered a clear-cut instance of market abuse that goes against the law.
The European Securities and Markets Authority (ESMA) has released its third set of proposals for the technical implementation of certain regulations.
— Patrick Hansen (@paddi_hansen) May 27, 2024
The European Securities and Markets Authority (ESMA) has released a draft outlining the reporting template for suspicious transactions, as part of its comprehensive approach. Although not yet final, this proposal is subject to potential modifications in the coming months. ESMA invites stakeholders to share their feedback on the suggestions by June 25.
EU Looking to Reposition For Business
The European Union’s efforts to combat market manipulation and other questionable practices related to Market Making and Execution (MEV) can be seen as a key initiative for the bloc to strengthen its role in the global capital markets.
According to a previous post by Hansen on X, the European Union has been experiencing unfavorable developments in various crucial aspects. Hansen expressed significant concerns over the decreasing proportion of investor capital in the region. He warned that the EU could lag behind other economic powerhouses such as the United States if it fails to address these issues effectively.
Amid these claims, Bitcoin, through MiCA implementation might help reposition the bloc as needed.
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2024-05-27 17:58