We're told MiCA is a victory. A landmark. A victory, indeed, though perhaps a surprising one as Ekmel Çilingir, Chairman of EMBank’s Supervisory Board, would have you think. Volumes up, stablecoins flowing, fintechs supposedly empowered. But before we uncork the champagne, let's ask a crucial question: Does Regulation Truly Set Us Free?
Think about it. Each of those gilded cages was, at some point, a misinformed effort to guard against imagined threats. At every turn in our history, there have been similar regulations passed in the name of “protection” that snuffed out innovation, protected incumbents, and picked our pockets. And are we confident that MiCA isn’t just the latest version?
Yes, trading volumes are up 28%. Yes, MiCA-compliant stablecoins are being issued. Correlate this to something else: the rise of centralized, permissioned blockchains. Decentralization in action, or a quiet slide back towards the same system crypto was initially intended to replace? Maybe that’s it, the illusion of decentralization really is the magic sauce.
Innovation's Chokehold or Guiding Hand?
EMBank, regulated by the ECB and headquartered in Vilnius, therefore has an obvious incentive in favor of regulation. They're at the "intersection of traditional banking and digital innovation." Then ask yourself the question, who benefits the most from that intersection? The agile fintech with a groundbreaking DeFi integration, or the traditional institution with lots of cash and regulatory know-how?
MiCA, notwithstanding its touted benefits of centralised pan-European market access, establishes a regulatory moat. A moat that serves as a hedge for the incumbents, the same institutions that crypto was built to evade. The cost of compliance? Staggering. The legal hurdles? Onerous. If you’re an SME interested in innovating, MiCA can be maddening. We get it, it can sometimes seem more like a muzzle than a crutch.
Picture a world where the internet was regulated the same way that we are allowing crypto to be regulated today. Would we have experienced the boom in innovation that characterized the late 90s and early 2000s? Would Google, Amazon, or Facebook even exist? The internet flourished because it was allowed to, a largely unregulated, uncapped Wild West of experimentation and disruption. Are we giving up that same promise by crypto?
The fear is real. The concern that MiCA will, under the guise of consumer protections and crypto legitimization, suck all the disruptive air out of this technological wonder.
Who Really Wins With Regulation?
Let's connect this to another industry: pharmaceuticals. We’re all in agreement that strict FDA regulations are necessary to ensure the safety and efficacy of pharmaceuticals. However, they establish huge barriers to entry, letting pharmaceutical behemoths corner the market and pile on sky-high prices. Is it any wonder that these companies are able to spend millions regularly lobbying the regulators into doing just that?
Could large corporations, with their armies of lawyers and lobbyists, shape the regulations to their advantage, effectively locking out smaller competitors? It’s a serious concern, and one that merits sober consideration. This is where the specter of regulatory capture raises its ugly head.
And the US pivot, with its federated Crypto Task Force and influx of Bitcoin/Ethereum ETFs? Are these true moves towards adopting innovation? Or just efforts to enforce regulations upon and collect payments from a burgeoning asset class. By accepting and conforming to these regulatory frameworks, might we be unintentionally validating a system that one in which the elites win and the little person loses?
I get it — the narrative of “responsible crypto integration” is attractive, no doubt. But responsible to whom? To the consumer? Or to the established financial order?
Brave New World or Same Old Game?
EMBank champions financial inclusion and commercial agility. Noble goals. Let's be brutally honest: financial inclusion often means bringing more people into a system that's rigged against them. Commercial agility, in a heavily regulated environment, often means adapting to the rules of the game, not changing them.
We're at a crossroads. Crypto could revolutionize finance, empower individuals, and create a more equitable world. Or, it could sadly turn into yet another tool for the wealthy and the powerful to further entrench their control. MiCA, and regulation like it, will signal the right direction and provide clarity about which path we choose.
The question should not be whether regulation is needed. Some degree of oversight will be unavoidable. The real question is: Are we building a trap? Have we become so enamored with security that we are willing to give up freedom in exchange for it? Are we really so desperate to legitimize crypto that we’re killing its spirit?
We should definitely be cautious about their unintended consequences. We need to ask tough questions. We need to remember why crypto was created in the first place: to challenge the status quo, not to reinforce it. The excitement that crypto originally created is drifting away – don’t allow regulation to snuff it out fully.
