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Norges Bank, Norway’s central bank, has released its annual Financial Infrastructure Report. He devoted a significant part of the report to cryptocurrency assets and the question of whether Norway should rely on examples of international regulation to control its market.
The European Union’s Crypto Asset Markets Regulation (MiCA) will come into force in a year or two, and it “probably will also apply to Norway.” However, “The Ministry of Finance will assess the relevance and implementation of the EEA in Norway,” Norges Bank said. Norway is a member of the European Economic Area, but not the EU.
According to Norges Bank, MiCA may not comply with all cryptocurrency regulation requirements:
“Such targeted regulation often does not take into account the risks associated with the latest technological developments and activities, and therefore may not be sustainable enough.”
The bank pointed to weaknesses in decentralized finance regulation as an example of this problem in MiCA.
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The quality of regulation has a psychological effect. “In order to have a preliminary disciplinary effect, it is necessary that the participants perceive the probability of being detected as sufficiently high,” the report says. This is relevant to other authorities, but the bank “will facilitate such assessments,” he added.
“The [Norwegian] authorities should consider a national strategy for regulating crypto-asset markets.”
— Norges Bank, Financial Infrastructure Report 2023, May 25, 2023 https://t.co/b0Z56WdupD pic.twitter.com/DRGHZCX306
— Joshua Rosenberg (@_jrosenberg) May 25, 2023
The document states that further development of MiCA may be driven by national interests that Norway does not share. Therefore, “Norwegian authorities should assess whether to act faster rather than wait for decisions from international regulators.”
Without such a move, “private persons” could have undue influence over Norwegian regulation such as taxation, the bank said.
Lack of experience with crypto assets due to their newness can hinder good regulation. The extent to which current legislation is able to effectively regulate cryptocurrency is one of the unresolved issues related to it, the bank continued.
The bank also said it is continuing its research into the central bank’s digital currency and will publish its findings later this year.