Regulation boosts demand for crypto oversight: report

A new study by Acuiti shows that European Union regulations governing the market for cryptographic assets (MiCA) will result in an increase in investment in cryptocurrency trading supervision systems.

The report, which was commissioned for Eventus, a company specializing in surveillance software and services, was based on 68 interviews with crypto industry executives and found that of the companies covered by MiCA, only 9% were fully prepared and a quarter of companies were not started preparations. With MiCA going into effect at the end of the year, it’s important for companies to determine now if they are within scope and begin preparing for compliance, Acuiti says.

In terms of market surveillance, the MiCA regulation is based on the requirements set out in the EU Market Abuse Regulation (MAR), explains Acuiti. For many companies, particularly crypto companies, that are entering the scope for the first time, it is said that there will be a significant operational increase to implement the systems required for compliance. He adds that the survey showed there is still a high level of companies that are unsure whether they are within the scope.

That said, the cryptocurrency market is already becoming more sophisticated when it comes to market surveillance, as the report found that companies across the market, including 57% of those that consider themselves outside the scope of MiCA, already had market surveillance systems in place.

As consultations on the final technical standards are still ongoing, one quarter of the technical standards have not yet started preparations. Less than a third were in the early stages of preparation, and just over a third were in the advanced stages, Acuiti says. Companies investing in new systems have typically considered outsourcing to a third-party software vendor, with 64% planning to do so, although many companies expected challenges in finding the right vendor to meet their needs.

Of all the challenges MiCA has posed for in-scope businesses, the report found that the costs of compliance and finding skilled workers were key factors that businesses predicted would cause them problems.

“For companies not yet compliant with MIFID II, MiCA will represent a significant operational boost to becoming compliant, and it is no surprise that we found that companies were looking to external suppliers to help them prepare,” says Ross Lancaster , head of research at Acuiti. “In some areas of the market there is a relative lack of awareness of who is covered, which will need to be addressed if companies are to have time to prepare for compliance.”

Eventus CEO Travis Schwab adds: “While there are similarities in trade oversight across asset classes, digital assets can present some unique challenges. Starting several years ago, we invested significantly in ensuring we can meet the needs of this sector, including the ability to support real-time alert generation across billions of messages per day, 24/7. Regulation in the EU is just the beginning of new regulatory guidance that we expect to emerge in jurisdictions around the world in the coming years.”