Observers claim that the absence of enforcement undermines crypto regulations in the European Union.

The European Union’s flagship cryptocurrency legislation, which was passed in 2023, will 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. The new regulations, known as the Markets in Crypto-Assets Regulation (MiCA), are based on the EU’s Electronic Money Directive (EMD II), which has been violated for years. Egilsson expressed concern about the inconsistent enforcement and its impact on e-money firms in the area. He noted that issuing e-money requires a license as an e-money institution, and failure to obtain one can result in fines and imprisonment. However, not everyone is subjected to the same level of scrutiny. Becoming a licensed issuer also presents additional challenges, as licensed entities face restrictions on what they can do and how they can promote their services. They are also required to submit reports that may be deemed inadequate by regulators. In contrast, other forms of money, such as stablecoins, operate without the same level of regulatory oversight. Egilsson expressed frustration with regulators allowing this disparity to persist. Cointelegraph also spoke with Natalia Latka, the policy director and regulatory affairs expert at blockchain analysis firm Merkle Science, who explained that there are two conflicting perspectives on the regulation of electronic money tokens (EMTs) or stablecoins in the EU. One viewpoint considers the EMD as the primary regulation for EMTs, while the other sees MiCA as the main legislation. The latter perspective emphasizes the differences between EMTs and traditional electronic money, arguing that stablecoins pose additional risks that were not adequately addressed by the EMD. The European Commission ultimately decided to create a bespoke regulatory framework, MiCA, to address these regulatory gaps. However, the enforcement of this new framework has not been consistent. Despite this, Egilsson believes that MiCA will be enforced effectively. While MiCA represents a significant development, the legal debate on stablecoins and e-money is far from over. Further clarification is needed from EU authorities regarding how MiCA interacts with existing financial regulations and directives. The industry requires clear guidance and a strategy to resolve any conflicting or overlapping regulations.