“MiCA Will Change the Cryptocurrency Market as We Know It”: Gracy Chen
New rules to regulate the cryptocurrency industry will come into effect this year. MiCA will change the rules of work in the cryptocurrency market. Does regulation do more good than harm?
The new MiCA rules (a bill on regulation of the cryptoasset market) will come into force very soon, on December 30, 2024. Many experts believe that this law will have a profound impact on the entire industry and potentially become the standard for the global regulation of cryptocurrencies.
Some exchanges have already started preparing for the upcoming changes. In this sense, media outlet set out to find out how they are preparing for the adoption of MiCA on one of the main trading platforms: Bitget. For this, its CEO, Gracy Chen, was contacted.
Changes in the European Crypto Landscape According to Chen
The CEO of Bitget shared her predictions for the future of cryptocurrency trading and the adoption of innovations in the EU in the context of the adoption of the MiCA rules. She highlighted several main points:
Legitimation and stability. By introducing clear rules, the EU can provide a legal framework for cryptocurrency transactions, attracting more conservative institutions and retail investors who were previously put off by the lack of clear rules. The market may become more stable and less volatile.
Stimuli for innovation. Regulatory measures can provide the conditions for innovation to develop within a clearly defined legal framework. Companies can feel more confident investing resources in developing new technologies and services, potentially positioning Europe as a global hub for blockchain and cryptocurrency innovation.
Greater consumer protection. These regulations include measures to protect consumers from deception, fraud and market manipulation. This will increase confidence in the cryptocurrency market, encouraging more people to participate and invest.
Effects of MiCA on the Operation of Crypto Platforms
Speaking about how crypto service providers will have to “survive,” Gracy Chen noted that more trading platforms will have to comply with strict regulations and requirements. This medal has two sides:
“Firstly, it could raise barriers to entry and make things difficult for platforms that do not meet regulatory requirements or cannot cover compliance costs. Secondly, it could contribute to market consolidation, causing smaller or non-compliant platforms to exit the market, resulting in fewer markets and services available.”
At the same time, these requirements can attract more traditional financial institutions and investors to participate in the cryptocurrency market, the Bitget director noted.
“Because licensed platforms must meet strict standards, investors may be more willing to trade on these platforms as they will have confidence that these platforms can provide a safe, transparent and legal trading environment.”
Future of Stablecoins
Regarding the upcoming restrictions on these assets in the European Economic Area. Chen mentioned several possible scenarios:
Decrease in market liquidity. Liquidity in the cryptocurrency market may decrease, making it difficult for traders to buy and sell quickly, especially in less liquid markets.
Search for alternatives. Traders can turn to alternative assets for liquidity and coverage. These could be other unrestricted stablecoins, as well as cryptocurrencies that provide similar benefits.
Adjustment of market trading strategies. If traders can no longer use certain stablecoins as a hedge, they may have to adjust their trading strategies. This may include using different financial instruments or adopting different risk management approaches.
Chen noted that, in general, EU policy is favorable to cryptocurrency traders and platforms. She believes that the adoption of MiCA brings more new opportunities than potential challenges.
By Leonardo Perez