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MEV deemed ‘illegal’ market abuse under the EU’s MiCA directive

Posted on by darion

The European Union (EU), through its Markets in Crypto Assets (MiCA) Regulation, has identified Maximum Minable Value (MEV) as a clear example of an illegal market manipulation strategy.

ESMA expresses its disapproval of abuses on the MEV market

The European Securities and Markets Authority (ESMA) has published its third consultation package, which aims to clarify how certain legal statements can be interpreted. This approach aims to help remove any ambiguities in the law, which will take several months to be fully implemented.

EU-designated MEV attacks are common in the financial ecosystem, including the crypto ecosystem. According to Patrick Hansen, head of EU strategy and policy at Circle, a recently published article gave a defined definition of what MEVs mean.

“The well-known Maximum Minable Value (MEV), whereby a miner/validator can exercise his or her ability to arbitrarily reorder transactions in order to outperform a specific transaction(s) and thereby make a profit, clearly suggests the existence of market abuse,” it says in the report on page 10.

To prevent such attacks, ESMA will ask trading platforms to report such cases of abuse in the MEV market. While the resolution of this issue is complex, regulators are trying to make MiCA provisions as comprehensive as possible.

As part of its detailed approach, ESMA has also published a 6-page draft outlining a template for reporting such suspicious transactions. This rule, while not final, is likely to undergo additional modifications over the next few months. The European Markets Regulatory Authority is seeking views from interested parties on the proposals, setting a deadline of 25 June for comments.

The EU is looking to reposition business

The EU’s fight against abuses in the MEV market and other related market failures appears to be one of the ways in which the bloc is trying to change its position on the capital market.

As Hansen’s previous entry on the X website shows, the European Union is recording negative trends in several key areas. With investor equity declining, Hansen shared his main concerns. He predicted that the region could fall behind others such as the United States if it did not take appropriate action.

Among these claims, Bitcoin, through the implementation of MiCA, can help reposition a block when needed.

Read more: Argentina capitalizes on El Salvador’s Bitcoin strategy amid rising cryptocurrency use