New Cyber Security Regulations Coming to the Crypto Industry
The European Securities and Markets Authority (ESMA), the European Union's market supervisory authority, plans to subject crypto companies' cyber defenses to mandatory external audits in a bid to increase consumer protection in the face of increasing cybersecurity breaches. This move is considered an important step to increase security in the crypto industry and protect consumers.
According to a report by the Financial Times, ESMA is considering a proposal to mandate external audits of cyber defenses for crypto businesses. The institution states that this measure was taken to increase the resilience of companies operating in the crypto field against cyber attacks and to create a more robust control mechanism.
However, the European Commission opposes ESMA’s proposals and states that these regulations may exceed the scope of existing laws. This has led to a debate among regulatory authorities.
Cybersecurity has become an increasingly pressing issue for the crypto industry. According to TRM Labs data, hackers have stolen almost $1.4 billion by 2024. This figure almost doubles last year’s figures.
Chainalysis states that there is a 2.8% increase in the number of hacking incidents in 2024, but the average amount lost in each incident has increased by 79.5%. While the average loss was 5.9 million dollars in 2023, this figure increased to 10.6 million dollars in 2024. This increase comes as a result of cybercriminals’ focus on centralized exchanges.
Under the upcoming CryptoAssets Framework, crypto firms will be required to obtain licenses from European Union member states by December 31, 2024 and introduce robust controls to combat financial crimes such as money laundering.
This regulatory framework has led to some significant changes in the crypto industry. For example, Coinbase announced plans to remove incompatible stablecoins from its European exchange. Such developments show the impact and importance of regulations in the sector.
However, there are also concerns about these regulations among industry leaders. Paolo Ardoino, Tether’s CEO, warned that strict cash reserve requirements could create systemic risks for banks. This raises concerns that it could lead to negative impacts on the adoption of cryptocurrencies and market dynamics.
The tendency to delist also stands out as a remarkable trend. Kraken has announced plans to remove Monero from trading in the European Economic Area. This step comes after similar practices by Binance and OKX.
Such movements in the industry create uncertainties on the future of cryptocurrencies as a result of regulations and market conditions.
The EU’s supervision and regulatory efforts in the crypto sector stand out as an important development in terms of cybersecurity concerns and consumer protection.
However, the discussions and uncertainties in this process leave question marks about what kind of transformation will occur in the crypto market. How regulations and inspections will be shaped will play a decisive role in the future of the sector.
