EU MiCA Regulation Declares MEV ($MEV) as Illegal Market Abuse: Major Impact on Crypto Trading

• The European Union (EU) has reportedly designated Maximum Extractable Value (MEV) as illegal market abuse under MiCA regulation.
• The European Securities and Markets Authority (ESMA) has published a new report to push for MiCA implementation.
• The report detailed the rules governing MEVs and emphasized the need for market stakeholders to report suspicious MEV activities.

Discover how the EU is tackling MEV market abuse under MiCA regulation and what this means for the crypto industry.

ESMA To Frown At MEV Market Abuse

The European Securities and Markets Authority (ESMA) released its third consultation package, aiming to clarify how some claims in the law can be interpreted. This approach is designed to help remove any form of ambiguity in the law, whose full implementation is months away.

The MEV attacks the EU is designating are prevalent in the financial ecosystem, including the crypto ecosystem. The recently published paper, according to Patrick Hansen, Circle’s EU Strategy and Policy Head, provided a defined definition of what MEVs stand for.

“The well-known Maximum Extractable Value (MEV) whereby a miner/validator can take advantage of its ability to arbitrarily reorder transactions to front-run a specific transaction(s) and therefore make a profit clearly suggests the existence of market abuse,” the report reads on Page 10.

In order to prevent such attacks, ESMA will look to trading platforms to report such MEV market abuse incidences. While there are intricacies to get this sorted, the regulators are looking to make the provisions of MiCA as comprehensive as it is clear.

EU Looking to Reposition For Business

The EU’s fight against MEV market abuse and other related market mishaps is one of the avenues the bloc is looking to reposition itself in the capital market.

Per an earlier post on X by Hansen, the European Union has been recording negative trends in several key areas. Amid the dwindling investor capital share, Hansen shared his major worries. He projected that the region may fall behind others like the United States if it does not take proper action.

Amid these claims, Bitcoin, through MiCA implementation, might help reposition the bloc as needed.

Conclusion

The EU’s designation of MEV as illegal market abuse under MiCA regulation marks a significant step in regulating the crypto market. By clarifying the rules and requiring trading platforms to report suspicious activities, the EU aims to create a more transparent and fair trading environment. As the full implementation of MiCA approaches, stakeholders should prepare for a more stringent regulatory landscape that could reshape the future of crypto trading in the region.