The European Securities and Markets Authority (ESMA) is urging EU lawmakers to strengthen crypto regulations by introducing mandatory external cybersecurity audits for companies in the industry. The Financial Times reported this on Oct. 16.
The crypto sector faces a significant rise in cyberattacks, which threatens consumer protections. This recommendation is part of proposed changes to the upcoming regulatory framework.
Cybersecurity Audits are Necessary
ESMA proposed an amendment to the Markets in Crypto-Assets Regulation (MiCA), scheduled for full implementation in December 2024. They want companies to undergo third-party cybersecurity audits to uncover and fix potential vulnerabilities. This approach is necessary because cybercriminals are increasingly targeting the crypto industry.
The urgency of this action stems from data showing that over $1.5 billion was stolen from crypto platforms in the first half of 2024. This amount represents an 84% increase compared to the same period in 2023. Incidents like the $52 million hack of Singapore’s BingX in September and the $235 million breach of India’s WazirX in July demonstrate the growing threat.
Resistance to the Proposal
While MiCA already includes licensing and anti-money laundering protocols, ESMA’s push for audits has met some opposition. The European Commission expressed concerns that this requirement may go beyond the original scope of MiCA. However, several regulators and industry experts argue that the increase in cyberattacks justifies stricter oversight.
Global Considerations
The demand for stronger cybersecurity isn’t limited to Europe. A report by the European Parliamentary Research Service (EPRS) emphasized the need for more scrutiny of crypto operations worldwide, especially in regions like the US, where regulations remain less consistent.
As MiCA’s full implementation approaches, the EU’s stance on ESMA’s proposed audits remains uncertain. However, the push for stricter security measures highlights a broader global effort to make the crypto industry more resilient to cyber threats. This will help protect consumers in an increasingly volatile market.
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