Markets
Here’s how MiCA regulations will impact the European cryptocurrency market
Below is a guest post by Mike Romanenko, CVO and co-founder of Kyrrex.
The European cryptocurrency landscape is on the verge of a significant transformation with the introduction of the Markets in Crypto-Assets (MiCA) regulation. Mike Romanenko, CVO and co-founder of Kyrrex, predicts it will present multiple opportunities and challenges for cryptocurrency operators in European countries.
Expected changes after MiCA adoption
THE MiCA adoption in European countries marks a monumental shift for the cryptocurrency industry. For market participants, this regulation introduces strict rules that govern various aspects of the industry, including cryptocurrency exchanges, fund custody, and customer verification processes. While these rules may initially seem rather burdensome, they are designed to improve the security and transparency of cryptocurrency operations.
More importantly, a primary goal of MiCA is to protect end users by ensuring that companies adhere to transparent auditing practices and maintain verifiable reserves. This need for transparency has become especially apparent following the numerous collapses of large cryptocurrency companies since 2020, most notably The collapse of FTXwhich highlighted the vulnerabilities and risks of the sector.
I believe that regulation will facilitate the entry of institutional investors into the cryptocurrency market. By establishing clear and consistent rules, MiCA can help attract significant institutional and corporate funds, increasing market liquidity and stability. This situation mirrors the introduction of Bitcoin ETFs in the United States, which allowed institutional investors to gain exposure to Bitcoin through regulated financial products.
The challenge of implementation
Despite the long-term benefits, I never expected the initial implementation phase of MiCA to be easy. There are currently around 2,000 Virtual Asset Service Providers (VASPs) in Europe, many of whom are slow to comply with the upcoming regulations. Local authorities will face significant pressure to review and approve applications in a timely manner, which could lead to a potential backlog and operational delays.
Some countries, such as Malta and France, have already begun to align their regulations with MiCA, but overall readiness across Europe varies significantly. I expect this disparity could cause a period of confusion and disruption as businesses strive to meet the new standards.
The entire process is planned for three years, from June 2023 to July 2026, and includes the following phases:
- Entry into force of MiCA (June 2023).
- Deadline to waive or reduce the duration of the safeguard clause (June 2024).
- Entry into the MiCA application (December 2024).
- End of transition phase (July 2026).
MiCA has the potential to have a significant impact on the cryptocurrency market within the EU. I would like to highlight the following expected effects:
- Greater consumer protection. The aim of MiCA is to establish clear rules for cryptocurrencies, ensuring better protection for investors.
- Greater market integrity. By setting governance standards, MiCA aims to promote fair competition and prevent market abuse.
- Simplified cross-border transactions. A harmonised regulatory ecosystem will make it easier for EU companies to operate across borders.
- Drive for innovation. The pilot scheme for market infrastructures based on distributed ledger technology (DLT) could lead to more efficient financial systems based on blockchain.
I would say the key aspect of MiCA is the new classification for cryptocurrencies, known as CASPs: cryptocurrency service providers. It includes exchanges, custodial wallet providers and trading platforms, which will be subject to authorization by national authorities. The classification aims to ensure that all entities providing cryptocurrency services comply with the same regulations.
Regulatory Challenges and Opportunities in the United States and Other Countries
Unlike Europe, the United States does not have a unified regulatory framework for cryptocurrencies, which leads to considerable uncertainty. While Bitcoin is classified as a commodity, the status of other digital assets, such as Ethereum, remains ambiguous. Despite what I wanted to see, this lack of clarity complicates compliance and increases the risk of regulatory action against cryptocurrency companies.
However, there are many positive developments. The introduction of Money Transmitter Licenses (MTLs) for cryptocurrency exchanges has provided a path for companies to legally operate in more states. Full federal regulation is still pending, and is unlikely to be addressed before the next election.
We hope that the implementation of MiCA in Europe can serve as a valuable model for other regions, including the US, UK, Turkey, and India. I would like to see countries like India, where cryptocurrencies are currently banned, have a MiCA-inspired regulatory framework pave the way for legalized and safe cryptocurrency operations. Similarly, Turkey has faced significant challenges with unregulated exchanges, which have led to substantial losses for investors. Who would have thought that adopting a structured regulatory approach could mitigate such risks and foster a healthier cryptocurrency ecosystem?
Leader in cryptocurrency regulation and compliance
Here are some of the ways in which leaders are promoting smart regulation of the cryptocurrency sector to reshape the European cryptocurrency market:
- Commitment to transparency. Regulated and compliant entities leverage blockchain technology within their centralized infrastructure, improving transparency and efficiency. This approach is evident in the implementation of blockchain technology in internal transactions. Such integrations ensure that all transactions are traceable and secure, aligning with the rigorous standards expected of regulated companies.
- Rigorous compliance monitoring. A key aspect of regulatory compliance is the monitoring system. It includes internal compliance teams and external auditors who conduct semi-annual reviews to ensure adherence to all regulatory requirements. A notable feature of the compliance infrastructure is the real-time audit log server. It records all actions within the system, especially from the back office, providing 24/7 access to external authorities for real-time monitoring. This system ensures that any irregularities are quickly identified and addressed, reinforcing the company’s commitment to transparency and security.
- Future-proofing through strategic investments. Strategic investments should extend beyond compliance, focusing on the integration of new technologies. By staying in touch with current market trends, companies aim to incorporate the latest advancements into their ecosystem. This approach not only enhances their service offerings, but also ensures that they remain at the forefront of industry developments.
- Expansion of regulatory licensing. The companies are working to obtain additional regulatory licenses to expand their service offerings. One of their goals is to acquire the Markets in Financial Instruments Directive (MiFID) license, which allows them to provide regulated derivatives trading in Europe. This move is poised to fill a significant gap in the market, offering a transparent and compliant platform for futures and perpetual trading.
- Adapting to the global market. In addition to Europe, the companies are also keeping an eye on the US market, despite the current regulatory uncertainties. By obtaining Money Transmitter Licenses (MTL) in various states, they intend to strategically expand their presence in the US. This expansion underscores their commitment to navigating complex regulatory landscapes to offer secure and compliant services globally.
- Innovation for the future. The long-term vision includes developing a comprehensive financial super app that integrates a wide range of services into a single platform. Companies are interested in optimizing blockchain technology to reduce transaction fees and improve the overall user experience, further driving adoption.
Conclusion
The implementation of MiCA is a significant step towards creating a safe and transparent cryptocurrency market in Europe. While I expect the transition to be challenging, the long-term benefits of improved regulation, increased institutional investment and greater market stability are substantial.
Furthermore, MiCA’s framework could serve as a model for other regions seeking to effectively regulate their cryptocurrency markets. As the global cryptocurrency industry continues to evolve, the lessons learned from Europe’s regulatory journey will be invaluable in shaping the future of digital assets around the world.
As the cryptocurrency industry continues to develop, the importance of strong regulatory compliance cannot be overstated.
Bitcoin AND Etherealalong with the rest of the top 10 cryptocurrencies by market cap, appear to be in hibernation on Thursday morning.
At the time of writing, the Bitcoin Price is still below $65,000 and 2.2% lower than it was this time yesterday, according to CoinGecko data. Things are worse for the Ethereum Pricewhich is 3.7% lower than 24 hours ago at $3,185.22. The drop in ETH’s price is identical to that of Lido Staked Ethereum (stETH), a liquid staking token for Ethereum.
In recent days, falling prices have led to the liquidation of derivative contracts worth $225 million, according to Coin glassAnd about half of that, about $100 million, was liquidated in the last 12 hours.
When a trader is liquidated, it means that their position in the market has been forcibly closed by an exchange or brokerage due to a margin call or insufficient collateral. Margin is especially important when it comes to leveraged positions, which allow traders to control a multiple of their deposit, such as opening a $10,000 position with only $1,000 in their account.
Now that Bitcoin has been in the red for three days in a row, there is a chance that the world’s oldest and largest cryptocurrency could sink even further, BRN analyst Valentin Fournier said in a note shared with Decrypt.
“Bitcoin has closed in the red for three days in a row, with one-way trading showing limited resistance from bulls. Ethereum had a slightly positive Monday with strong resistance from bears who have won the last two days,” he wrote. “This momentum could take BTC to the $62,500 resistance or even the $58,000 territories.”
Looking ahead, Fournier said BRN’s strategy will be to “reduce exposure to Bitcoin and Ethereum and find a better entry point after the dip.”
This is despite Federal Reserve Chairman Jerome Powell’s comments yesterday on interest rates being widely regarded as accommodating and indicative of FOMC rate cuts in September.
Singapore-based cryptocurrency trading firm QCP Capital said the rally in stocks, which sent the S&P 500 up 1.6% from Wednesday’s close, was not felt in cryptocurrency markets.
“Cryptocurrencies have seen a broad sell-off overnight and into this morning,” the firm wrote in a trading note. “The market remains poised as traders pay close attention to daily ETH ETF outflows and further supply pressure from Mt Gox and the US government.”
Meanwhile, the other top-ranking coins are showing mixed performance.
Solana (SOL) is down 7.2% since yesterday to $169.13. Things are even worse for its most popular meme coins. In the past 24 hours, the most popular meme coins Dogwifhat (WIF) are down 12% and BONK (BONK) is down 9%, according to CoinGecko data.
Their dog-themed competitor, Ethereum OG Dogecoin (DOGE), the only meme coin in Coingecko’s top 10, is down nearly 4% since yesterday and is currently trading at $0.1205.
XRP (XRP) dropped to $0.608, which is 7% lower than it was at this time yesterday.
Binance’s BNB Coin (BNB) has kept pace with BTC and is currently trading at $571, down 2.4% from yesterday. Toncoin (TON), the native token of The Open Network, is down just 0.4% over the past day.
This leaves the stablecoins USDC (USDC) and Tether (USDT), both of which are stable as they maintain their 1:1 ratio with the US dollar.
The Securities and Exchange Commission (SEC) will hold another closed-door meeting with Ripple on Thursday, as the market hopes for a possible resolution to the legal battle between the two entities.
However, the cryptocurrency market remains relatively bearish, with the price and trading volume of XRP down in the last 24 hours.
Ripple holders take no risk
At press time, XRP is trading at $0.60. The altcoin’s price has dropped 6% over the past 24 hours. During that time, trading volume was $27 million, down 27%.
The SEC met before with the digital payment company on July 25. While the outcome of that meeting remains unknown, the Sunshine Act Notice for Thursday’s meeting includes one additional topic of discussion from the July 25 closed meeting: the instituting and resolving injunctive relief. That has market participants speculating whether a settlement is imminent.
In an exclusive interview with BeinCrypto, Ryan Lee, Lead Analyst at Bitget Research, noted that:
“This meeting will discuss possible resolution options for the Ripple Lawsuit. The founder of Ripple Labs said that a legal settlement could be announced soon. If an official settlement plan is released, it could positively impact XRP’s price movement.”
However, an assessment of XRP’s price movements on a 4-hour chart shows a spike in bearish bias as the market awaits the outcome of this crucial meeting. Its Moving Average Convergence/Divergence (MACD) indicator readings show that its MACD line (blue) has crossed below its signal line (orange).
XRP 4 Hours Analysis. Source: Trading View
Traders use this indicator to gauge price trends, momentum, and potential buying and selling opportunities in the market. When an asset’s MACD is set this way, it is a bearish signal that suggests selling activity is outweighing buying momentum.
Additionally, the altcoin relative strength index (RSI), at 46.08, is currently below its neutral 50 line and in a downtrend. This indicator measures overbought and oversold market conditions for an asset.
To know more: How to Buy XRP and Everything You Need to Know
XRP 4 Hours Analysis. Source: Trading View
At 43.83 at the time of writing, XRP’s RSI suggests a growing preference among the market participants for tokin distribution.
XRP Price Prediction: Derivatives Traders Exit Market
The XRP derivatives market has also seen a decline in trading activity over the past 24 hours. According to Coinglass, derivatives trading volume has plummeted 18% and open interest has dropped 10% during that period.
Open interest refers to the total number of outstanding derivative contracts, such as options or futurethat have not yet been resolved. When it drops, traders close their positions without opening new ones. This is a bearish signal that reflects a lack of confidence in any potential positive price movement.
According to Lee, the outcome of the meeting with the SEC “would have a significant impact on the price movement of the token.” If the outcome is favorable, the price of the token could rise towards $0.75 in August.
To know more: Ripple (XRP) Price Prediction 2024/2025/2030
XRP 4 Hours Analysis. Source: Trading View
On the other hand, if no favorable resolutions are reached, the price could plummet to $0.50.
Disclaimer
In line with the Trust Project guidelines, this price analysis article is for informational purposes only and should not be considered financial or investment advice. BeInCrypto strives to provide accurate and unbiased reporting, but market conditions are subject to change without notice. Always conduct your own research and consult a professional before making any financial decisions. Please note that our Terms and conditions, Privacy PolicyAND Disclaimers They have been updated.
Bitcoin is now the dominant force in the cryptocurrency market, surpassing 53% of the total cryptocurrency market, a stronger share than it has been in the past three years.
Bitcoin’s market cap now stands at $1.27 trillion, second according to CoinGecko data. In contrast, the total cryptocurrency market cap is $2.43 trillion, with Ethereum occupying 15.9% of the market, worth $389 billion.
Bitcoin’s rise to dominance this year is unusual, as altcoins typically do better than Bitcoin in a bull market. While meme coins made a strong comeback during Bitcoin’s rally to all-time highs earlier this year, the so-called “wealth effect” It has not been appreciated as much by mid-range coins, such as Ethereum and Cardano.
“ETF flows fundamentally alter market dynamics,” he wrote Meltem Demirors, former chief strategy officer at CoinShares, tweeted Wednesday: “BTC gains no longer translate to alts and the longer tail of crypto.”
Bitcoin’s takeover has continued even as the market cap of Tether (USDT) continues to grow, the world’s largest stablecoin and the third-largest cryptocurrency after BTC and ETH. Stablecoins are backed by fiat currencies and are excluded from some measures of Bitcoin dominance due to fundamentally different value models.
The surge continued to pace even after the launch of Ethereum spot ETFs last week, which ironically culminated in a news sell-off event, and net outflows from new investment products since they were launched. This went against the predictions of K33 Search so far, which predicted that ETFs would catalyze ETH’s growth over the next five months.
Despite the poorer performance of the alts, there is reason to believe that they are ready to bounce back very soon.
CryptoQuant CEO Ki Young Ju said Tuesday that whales are “preparing for the next altcoin rally,” as limit buy orders for assets other than BTC and ETH are on the rise.
The executive shared a chart showing how the “cumulative difference between purchase volume and sales volume” has increased in recent months.
“The indicator measures the difference between buy and sell orders over a year,” CryptoQuant told Decrypt. A buy/sell order is a pre-set request to buy or sell a cryptocurrency if it hits a certain price level, which creates resistance and support levels.
“If the trend is up, it means that more people are placing buy orders, showing strong interest in buying,” CryptoQuant said.
By Ryan-Ozawa.
After Monday’s crash, in which BTC fell by several thousand dollars, the scenario has repeated itself once again in the last 12 hours, with the asset falling to a 2-week low of $63,300.
Alt coins followed suit, with most of the market in the red today. SOL and XRP lead the way from the higher cap alts.
BTC Drops To $63.3K
After a violent Thursday last week, when BTC crashed to $63,400, the asset went on the offensive over the weekend and surged above $69,000 on Saturday, as the community prepared for Donald Trump’s appearance at the 2024 Bitcoin Conference in Nashville.
His speech was followed by more volatility before the cryptocurrency settled around $67,500 on Sunday. Monday started off rather optimistically for the bulls as bitcoin hit a 7-week high of $70,000.
However, he failed to maintain his run and conquer that level decisively. On the contrary, he was rejected bad and dropped to $66,400 by the end of Monday. Tuesday and Wednesday were less eventful as BTC remained still around $66,500.
The last 12 hours or so have brought another crash. Bears have pushed the leading digital asset down hard, which has fallen to a 2-week low of $63,300 (on Bitstamp), leaving over $200 million in liquidations.
Despite the current rebound to $64,500, BTC’s market cap has fallen to $1.270 trillion, but its dominance over alts is recovering and has reached 52.6%.
Bitcoin/Price/Chart 01.08.2024. Source: TradingView
The Alts are back in red
Ripple’s native token has been at the forefront of the market challenge in recent days as pumped up to a multi-month high of over $0.66. However, its run was also interrupted and XPR fell by more than 6% in the last day to $0.6.
The other big loser among the larger-cap alternatives is SOL, which has lost 8% of its value and is now struggling to get below $170.
The rest of this altcoin cohort is also in the red, with ETH, DOGE, BNB, AVAX, ADA, SHIB, and LINK all seeing drops between 2 and 5%.
The total cryptocurrency market cap lost another $70 billion overnight, falling below $2.4 trillion today on CG.
Cryptocurrency Market Overview. Source: QuantifyCrypto SPECIAL OFFER (sponsored)
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