- The current draft rules from ESMA categorize Maximum Extractable Value (MEV) as an egregious instance of illicit market manipulation.
Maximum Extractable Value (MEV) has been under close examination by the European Securities and Markets Authority (ESMA) due to its apparent involvement in illicit market manipulation, as per the proposed technical requirements for the Markets in Crypto-Assets (MiCA) regulation.
A well-known expert on cryptocurrency laws, Patrick Hansen, recently brought attention to this development on Twitter and noted its important ramifications for the cryptocurrency sector.
MEV observation
As per a social media post by renowned analyst on cryptocurrency rules Patrick Hansen.
The ESMA STOR template alone is six pages long, and Hansen emphasized that nearly all regulated cryptocurrency businesses in the EU, including exchanges and brokers, would need to detect and report cases of MEV through thorough “suspicious transaction or order reports” (STORs).
Concerns over the manageability of reporting each and every incident are raised by the proposed standards, which require comprehensive reporting procedures for MEV detection. Hansen questioned whether such stringent reporting rules could be implemented given the complexity and regularity of MEV events in the cryptocurrency market.
Furthermore, the draft guidelines from ESMA propose a cooperative approach to enforcement, calling on authorities from outside and inside the EU to work together to penalize market misuse. This implies that parties engaged in MEV may be subject to inquiries and enforcement measures from both international and EU regulators.
Deadline for consultation
A wide range of technical standards targeted at improving market integrity and safeguarding investors are included in the consultation package, which is a component of ESMA’s continuous efforts to improve MiCA’s implementation.
The EU’s dedication to combating complex types of market manipulation in the quickly developing cryptocurrency industry is highlighted by the focus on MEV.
Hansen underlined the value of stakeholder participation in the consultation process, pointing out that building sensible and workable regulatory measures requires input from people directly involved in MEV and other crypto activities.
The deadline for stakeholders to provide input on the draft standards is June 25 according to ESMA.
After they are approved, these rules could possibly set a precedent for other jurisdictions and play a significant role in creating the regulatory landscape for cryptocurrencies in the EU.
Disclaimer : This article was created for informational purposes only and should not be taken as investment advice. An asset’s past performance does not predict its future returns. Before making an investment, please conduct your own research, as digital assets like cryptocurrencies are highly risky and volatile financial instruments.
