MiCA poised to boost investment in surveillance for crypto trading firms

The Market Surveillance Market Review is available to download from: https://info.eventus.com/the-impact-of-mica-on-crypto-market-surveillance-insights-and-challenges

LONDON, June 27, 2024 /PRNewswire/ — The European Union’s Markets in Crypto Assets Regulation (MiCA) is set to accelerate ongoing investment in surveillance systems for cryptocurrency trading, a report from Acuiti has found.

The report, The Impact of MiCA on Crypto Market Surveillance: Insights and Challenges, which was commissioned by Eventus and based on a survey and series of interviews with senior executives at 68 firms engaged in crypto trade across the buy-side, sell-side and exchanges, found that a move to establish market surveillance systems is underway across the industry.

MiCA represents one of the first comprehensive regulatory frameworks for crypto trading to be developed in a major financial jurisdiction, and its adoption will increase requirements for market participants in a range of areas.

The study found that, of the firms that were in scope for MiCA, just 9% were fully prepared, and a quarter of firms had not begun preparations. With MiCA coming into effect at the end of the year, it is important that firms identify whether they are in scope now and begin preparations to comply.

In terms of market surveillance, the MiCA regulation is based upon requirements set out in the EU’s Market Abuse Regulation (MAR). For many firms, particularly crypto native firms coming into scope for the first time, there will be a significant operational lift to put in place the systems required to be compliant. This study found that there were still high levels of firms that were not sure if they were in scope.

The crypto market is already becoming more sophisticated when it comes to market surveillance, the report found with firms across the market, including 57% of those that consider themselves not in scope for MiCA, already having market surveillance systems in place.

With consultations still ongoing on the final technical standards, one quarter of those in scope had not yet started preparation. Just under a third were at an early stage of preparation, while just over a third were at an advanced stage.

Firms investing in new systems were typically looking at outsourcing to a third-party software vendor with 64% planning to do so, although many firms anticipated challenges in finding the right vendor for their needs.

Of all the challenges that MiCA posed to firms coming into scope, the costs of compliance and finding skilled staff were the key factors that firms anticipated would cause them issues.

“For firms that are not already operating under MIFID II, MiCA will present a significant operational lift to become compliant, and it is no surprise that we found that firms were looking to third-party vendors to assist them in their preparations,” says Ross Lancaster Head of Research at Acuiti.

“There is a relative lack of awareness among some areas in the market as to who is in scope, which will need to be addressed if firms are going to have time to get ready for compliance.”

Eventus CEO Travis Schwab said: “While there are commonalities in trade surveillance across asset classes, digital assets can present some unique challenges. We invested significantly beginning several years ago in ensuring we could meet the needs of this sector, including the ability to handle real-time alert generation covering billions of messages per day, 24×7. Regulation in the EU is only the beginning of new regulatory guidelines we expect to see in jurisdictions across the globe in the coming years.”

Download full report here: https://info.eventus.com/the-impact-of-mica-on-crypto-market-surveillance-insights-and-challenges

About Acuiti
Acuiti is a management intelligence platform designed to provide Senior Industry Professionals in the Derivatives Industry with high-value insight into industry-wide performance and business operations. Acuiti provides a platform through which our exclusive network of Senior Industry Executives can share and source information on day-to-day operational challenges, providing them and their management teams with increased transparency and in-depth analysis to make more informed decisions and benchmark company performance. Financial Institutions benefiting from our services include Banks, Non-bank FCMs, Brokers, Proprietary Trading Firms, Hedge Funds and Asset Managers.

About Eventus
Eventus provides state-of-the-art, at-scale trade surveillance software across all lines of defense. Its powerful, award-winning Validus platform is easy to deploy, customize and operate across equities, options, futures, foreign exchange (FX), fixed income and digital asset markets. Validus is proven in the most complex, high-volume and real-time environments of Eventus’ rapidly growing client base, including tier-1 banks, broker-dealers, futures commission merchants (FCMs), proprietary trading groups, market centers, buy-side institutions, energy and commodity trading firms, and regulators. Clients rely on the platform, coupled with the firm’s responsive support and product development, to overcome their most pressing trade surveillance regulatory challenges. For more, visit www.eventus.com.

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