Wednesday, May 29, 2024 ▪
3
min reading ▪ acc
In a bold move to regulate the crypto market, the European Union (EU) recently designated maximum extractable value (MEV) as illegal market abuse under its Markets in Crypto Assets (MiCA) regulation. The aim of this step is to limit sophisticated market manipulation and ensure fair competition between all participants.
Regulatory implications of MEV
MEV is the profit that block producers can make by rearranging, including or excluding crypto-transactions within a block. This practice can make the system unfair! Giving advantage to those with more resources and technical knowledge.
MEV’s classification as market abuse could pose significant obstacles to EU-regulated crypto businesses. According to the consultation, EU-based companies would be required to detect and report cases of VPD as a “suspicious transaction or order report” (STOR).
Reaction from the crypto industry!
Leading figures in the crypto industry propose various ways to solve this problem. Vitalik Buterin recently addressed MEV issues and proposed reducing MEV using protocols. These could hide transaction details until they are confirmed. But also to separate transaction drafters from block constructors to limit getting unfair values.
US financial regulators are also aware of the MEV threat. The United States Department of Justice (DOJ) announced the arrest of two brothers for using MEV tactics to steal $25 million from Ethereum. They are accused of fraud and money laundering and face up to 20 years in prison.
With this regulation, the EU is taking decisive steps to ensure transparency and fairness in the cryptocurrency market. As the debate about MEV and its impact on network security and trading fairness continues, the EU is positioning itself as a key player in the fight against market manipulation in the ecosystem. Trading platforms will have to adapt quickly to new requirements! Which could reshape the future of cryptocurrencies in Europe and beyond.
Maximize your Cointribune experience with our “Read and Earn” program! Earn points for every article you read and get access to exclusive rewards. Register now and start reaping the benefits.
Click here to join “Read and Earn” and turn your cryptocurrency passion into rewards!
The world is evolving and adaptation is the best weapon to survive in this wavy universe. Essentially a crypto community manager, I am interested in anything directly or indirectly related to blockchain and its derivatives. To share my experiences and raise awareness of a field that fascinates me, there is nothing better than writing articles that are both informative and relaxing.
DISCLAIMER OF LIABILITY
The comments and opinions expressed in this article are solely those of the author and should not be considered investment advice. Before making any investment decision, do your own research.