TheEuropeanSecuritiesandMarketsAuthority(ESMA)hascalledonEUlawmakerstostrengthencryptoregulationsbymandatingexternalcybersecurityauditsforcompaniesinthesector,theFinancialTimesreportedonOct.16.
Thisrecommendationcomesasthecryptoindustryfacesanalarmingincreaseincyberattacks,whichareputtingconsumerprotectionsatrisk.Itispartofproposedamendmentstotheupcomingregulatoryregime.
Mandatoryaudits
InaproposaltoamendtheMarketsinCrypto-AssetsRegulation(MiCA),settobefullyenforcedinDecember2024,ESMAadvocatesforenhancedmeasurestosecurecryptoplatforms.
Centraltotheproposalisarequirementforcompaniestoundergothird-partyauditstoassessandaddresspotentialcybersecurityvulnerabilities.ESMA’sappealhighlightstheneedfortightersafeguardsascybercriminalsincreasinglytargetthesector.
ESMAarguedurgencyforaction,citingdatashowingthatmorethan$1.5billionwasstolenfromcryptoplatformsduringthefirsthalfof2024,an84%jumpcomparedtothesameperiodin2023.
Recentincidents,suchasthe$52millionbreachofSingapore-basedexchangeBingXinSeptemberandthe$235millionhackofIndia’sWazirXinJuly,havefurtherillustratedtherisksfacingtheindustry.
Pushback
WhileMiCAhasalreadyintroducedlicensingrequirementsandanti-moneylaunderingprotocols,ESMA’spushformandatoryauditshasmetsomeresistance.
TheEChasvoicedconcernsthattheproposalcouldgobeyondMiCA’sintendedscope.However,someregulatorsandindustryobserversarguethatthegrowingscaleandsophisticationofcyberattacksjustifyadditionaloversightmeasures.
ThecallforenhancedcybersecurityregulationsisnotlimitedtoEurope.AreportfromtheEuropeanParliamentaryResearchService(EPRS)recentlyemphasizedtheneedforgreaterscrutinyofcryptooperationsbeyondtheEU,particularlyinregionsliketheUS,whereregulatoryframeworksremainlesscohesive.
AstheMiCAregulationsapproachtheirfullimplementation,itremainstobeseenwhethertheEUwillembraceESMA’sproposedcybersecurityauditmandate.Nonetheless,thepushforstrictersecurityprotocolsreflectsabroaderglobalefforttostrengthenthecryptoindustry’sresilienceagainstcyberthreats,ensuringconsumerprotectioninanincreasinglyvolatilemarket.
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