François Villeroy de Galhau warns that complex regulations on crypto-currencies could create an “uneven playing field”

Central bank governor François Villeroy de Galhau has urged European regulators to “avoid adopting divergent or contradictory regulations, or regulating too late“. He warned that “this would amount to creating an uneven playing field, risking arbitration and cherry picking.“

Central bank governor warns against adopting “unduly complex” cryptographic regulations.

Bank of France Governor François Villeroy de Galhau spoke about crypto-currency regulation at a digital finance conference in Paris on Tuesday, he stressed:

We must be extremely careful not to adopt divergent or contradictory regulations, nor to regulate too late. That would create an uneven playing field, risking arbitrage and cherry picking.

Villeroy de Galhau added that regulations “unduly complex“When it comes to crypto-currencies, it may not ensure investor protection and the prevention of money laundering.

The European Commission introduced the draft Crypto Asset Markets Regulation Act (MiCA) in September 2020 as part of its digital finance strategy to bring crypto assets, issuers, and service providers across the EU under a single regulatory framework. The European Parliament and Council reached a tentative agreement on the MiCA bill on June 30, but MiCA is not expected to be implemented until 2024.

The European Central Bank (ECB) outlined in August its plan to harmonize the regulatory framework governing crypto-currency activities and services in the EU. “There is currently no harmonized regulatory framework governing crypto asset activities and services in the EU“, the regulator explained, adding that banks are increasingly questioning whether they should offer products and services related to crypto-assets, and that it is the role of the ECB to “ensure that they do so in a safe and sound manner.“

The European Securities and Markets Authority (ESMA), the EU’s top securities regulator, warned in May that soaring inflation could push retail investors into crypto-currencies. ECB Vice President Luis de Guindos said on Monday that inflation in the eurozone is getting broader as growth weakens. “We see that in the third and fourth quarters there is a significant slowdown and we could end up with growth rates close to zero“, he detailed.