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While United States regulators such as Securities and Exchange Commission Chair Gary Gensler make bad-faith claims that “there’s been clarity for years” when it comes to cryptocurrency, the European Union took real action in April when it passed the Markets in Crypto-Assets (MiCA) regulatory framework. While imperfect, it was a crucial move in the right direction for our industry and a signal to the U.S. that it will be left behind if it continues to stand still and rely on antiquated regulations.

Similar to how Bitcoin (BTC) took old technological, economic and financial concepts to build something new, regulators must rework existing regulatory and financial security frameworks to create a successful environment for participants. There are many useful and valid elements in our existing financial and regulatory frameworks.

Related: An ETF will bring a revolution for Bitcoin and other cryptocurrencies

On the other hand, there are many problems with the blockchain industry that the traditional regulatory framework does not address sufficiently — this leads to frustration and wasted resources as lawyers bicker over potential interpretations of statements instead of abiding by clearly defined legislation.

While Web3’s practical applications have shown great potential, it remains a remix of this traditional financial system — albeit a remix dedicated to improving efficiency, openness and fairness for all participants.

MiCA: A necessary but mediocre step forward for regulation

Despite the complex language around financial and securities regulations, the situation is really more simple than it appears. In short, our regulations attempt to prevent people from doing bad things to other people. Examples could include terrorists sending or receiving money to facilitate acts of terrorism or fraudsters making fraudulent claims to investors. It also includes ensuring that licensed individuals and entities are held accountable to a set of operating standards developed over the history of our modern financial markets.

In the more technical sense, the laws governing these operating standards are:

  1. Anti-Money Laundering and Counter-Terrorist Financing laws
  2. Securities and commodities laws
  3. Market infrastructure regulation

Despite the SEC’s insistence that existing regulations cover these three issues broadly, many elements manage to fall through the cracks of these roughly 100-year-old definitions, rules and penalties. We can largely attribute that problem to two things.

One is the categorization of digital assets. Are they commodities or securities, or do they fall under an entirely new category? Digital tokens often exhibit characteristics of one, both or neither, creating a significant dilemma for existing frameworks.

An overview of MiCA’s key points. Source: Circle

The second is that the pace of innovation far outstrips the rate at which slow and sophisticated traditional finance regulatory frameworks can adapt. Governments have the responsibility of establishing regulations that are robust enough to prevent misconduct and protect stakeholders, yet flexible enough to accommodate the advancements promised by this burgeoning industry. How are these authorities supposed to compete with a smart contract that can be deployed in minutes and then upgraded that same day to have a completely different set of logic and parameters?

To those of us in this fast-moving industry, it is glaringly obvious that we need new regulations and guidelines that are compatible with the unique benefits and challenges Web3 offers.

MiCA constitutes one promising attempt, though the framework will struggle as the individual member-states of the EU test the framework in their native courts and build a patchwork example of cases with varied outcomes. That being said, here’s the good, the bad and the ugly of MiCA.

MiCA: The good

The best part of MiCA? Tighter rules and larger punishments for crypto asset service providers who lose customer funds! This is a longstanding issue within crypto where the exchanges and wallets have no liability when they are hacked or compromised and lose users’ funds, and has led to tens of billions of dollars lost with no options for users. This is unacceptable and has directly contributed to many individuals being irrevocably destroyed in our industry by bad actors.

MiCA: The bad

Although it states a primary goal of preventing market manipulation, the majority of manipulation is happening outside of the EU (via offshore entities), so it doesn’t really help many people directly. It may help indirectly, though, as it signals to the market the direction regulators are moving toward — though this also depends on the punishments levied when cases come to a judge.

Related: 3 takeaways from the European Union’s MiCA regulation

Noticeably excluded are decentralized finance and future central bank digital currencies. Although it might be seen as a positive that DeFi is not included, the vast majority of on-chain transactions and activity are DeFi, and it is frustrating that this was skipped.

MiCA: The ugly

Unfortunately, there are many concerning or otherwise “ugly” elements present in MiCA that readers must be aware of, and not only if they’re EU citizens.

  • The “Travel Rule” greatly increased the surveillance and recording of financial transactions and online activity in an unprecedented manner by forcing service providers to identify the recipient as well as the sender for every transaction.
  • A very low threshold of 1,000 euros for reporting leads to increased surveillance, as compared with the traditional threshold of $10,000 in the United States for banks. It’s irritating to have regular people be subjected to these Orwellian levels of scrutiny, given that the vast majority of financial malfeasance is done by larger banks and institutions via money laundering and other fraudulent activities.
  • It requires official approval from lawmakers before launching tokens or liquidity. This will dramatically stifle the number of legitimate projects launched within the EU, both directly and indirectly. It’s hard to assume that the queues will be short and the process expeditious — governments have proven time and time again that they are slow and inefficient, especially where new technologies are concerned.

There’s another core problem inherent in any regulation by the European Union that bears repeating: The fragmented nature of the EU’s court system makes it difficult to draw meaningful conclusions about the impact of individual future rulings. In short, this is a minor win for Web3 and requires much more work around the world by regulators.

This is in stark contrast to the U.S. court system, which is — traditionally, albeit not with Web3 — a unified and solid foundation of legal rulings. A fragmented series of rulings makes it very unlikely that other countries will really follow MiCA full-steam ahead; instead, they will likely wait for the U.S. to come out with its own substantial framework and regulatory guidelines.

Regulators, exchange operators and founders all say that until the U.S. has a substantial set of regulatory guidelines, they will be proceeding very cautiously and slowly. Although they may take some inspiration from MiCA, it is not the North Star they need.

The blockchain industry is at a crossroads, for both regulators and users. Countless individuals have had their life savings ruined by fraud and scams, while regulators have struggled to keep up with the rapid pace of innovation in the industry.

Mike Sarvodaya is the founder of the Galactica Network, a layer-1 protocol that leverages zero-knowledge cryptography to achieve Sybil resistance, compliant privacy and infuse robust reputation primitives into DeFi and DAOs. He graduated first in his class from Utrecht University with an MsC in financial econometrics. Before Galactica, he spent the majority of his career as a risk manager and analyst at global hedge funds focused on proprietary trading in currencies, stocks, commodities, and digital assets.

This article is for general information purposes and is not intended to be and should not be taken as legal or investment advice. The views, thoughts and opinions expressed here are the author’s alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.

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Sir Keir Starmer could be ousted as PM within months, two senior Labour MPs tell Sky News

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No 10 backs Chancellor Rachel Reeves and says she 'is going nowhere' after tearful appearance in Commons

Two senior Labour MPs have suggested the prime minister may have to go within months if the government continues to perform poorly.

Sky News’ deputy political editor Sam Coates said his sources – a member of the government and a prominent politician – have “put Sir Keir Starmer on notice”.

Both warned that, if Labour performs badly in next May’s elections across Wales, Scotland and London, it could mark the end of his time in Downing Street.

Coates added: “The level of unhappiness and despair in parts of the Labour Party is so striking that right now, on the first anniversary, I am hearing from ministers in government that Starmer might have to go in months.”

Reform UK is surging in the polls in Wales, while Labour faces a threat from left-wing parties such as the Greens in London.

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Why was the chancellor crying at PMQs?

It comes as the prime minister made it clear that Rachel Reeves has his “complete support” as chancellor and remains integral to his project, Sky News’s political editor Beth Rigby understands.

She looked visibly upset during Prime Minister’s Questions, with a spokesperson claiming she had been affected by a “personal matter”.

A day earlier, Sir Keir’s controversial welfare bill was passed despite a sizeable rebellion from Labour MPs, with major U-turns meaning a new £5bn black hole has appeared in the country’s finances.

One senior figure told Rigby that the pair were as “as close politically” as any chancellor and prime minister have ever been.

“She is going absolutely nowhere,” they added.

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Welfare vote ‘a blow to the prime minister’

Ms Reeves’s tears sent markets spiralling, with the value of the pound and long-term government bonds falling sharply.

Later in the day Sir Keir, said Ms Reeves will be chancellor for a “very long time to come”.

The prime minister said it was “absolutely wrong” to suggest her tearful appearance in the Commons related to the welfare U-turn.

“It’s got nothing to do with politics, nothing to do with what’s happened this week. It was a personal matter for her,” he said while speaking to the BBC’s podcast Political Thinking with Nick Robinson.

“I’m not going to intrude on her privacy by talking to you about that. It is a personal matter.”

Read more from Sky News:
Just 25% of public think Starmer will win next election
Analysis: Emotional Reeves a reminder of tough decisions ahead

Asked if she will remain in post, he said: “She will be chancellor by the time this is broadcast, she will be chancellor for a very long time to come, because this project that we’ve been working on to change the Labour party, to win the election, change the country, that is a project which the chancellor and I’ve been working on together.”

He said Ms Reeves has done a “fantastic job” and added: “She and I work together, we think together. In the past, there have been examples – I won’t give any specific – of chancellors and prime ministers who weren’t in lockstep. We’re in lockstep.”

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Starmer to set out 10-year vision for NHS

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Starmer to set out 10-year vision for NHS

Sir Keir Starmer will set out his 10-year vision for the NHS in what the government says is “one of the most seismic shifts” in the health service’s history.

He will pledge three main facets of the plan: moving care into the community, digitising the NHS, and a focus on sickness prevention.

The prime minister will announce neighbourhood health services will be rolled out across England to improve access to the NHS and to shift care out of overstrained hospitals.

PM ‘might have to go in months’ – politics latest

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What will the NHS 10-year health plan focus on?

Sir Keir has already promised thousands more GPs will be trained, and to end the 8am “scramble” for an appointment.

He also previously said his government will bring the NHS into the digital age, with “groundbreaking” new tools to support GPs rolled out over the next two years – including AI to take notes, draft letters and enter data.

And he will promise new contracts that will encourage and allow GP practices to cover a wider geographical area, so small practices will get more support.

Unite, one of the UK’s largest healthcare unions, welcomed the plan cautiously but said staff need to be the focus to ensure people are better looked after.

Read more:
Hundreds of NHS quangos to be axed

How pilot scheme from Brazil is helping NHS

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Do you want AI listening in on chats with your doctor?

‘Reform or die’

Sir Keir said: “The NHS should be there for everyone, whenever they need it.

“But we inherited a health system in crisis, addicted to a sticking plaster approach, and unable to face up to the challenges we face now, let alone in the future.

“That ends now. Because it’s reform or die.”

He said the government’s plan “will fundamentally rewire and futureproof our NHS, so that it puts care on people’s doorsteps, harnesses game-changing tech and prevents illness in the first place”.

The PM said it would not be an “overnight fix”, but claimed Labour are “already turning the tide on years of decline”, pointing towards more than four million extra appointments, 1,900 more GPs, and waiting lists at a two-year low.

“But there’s more to come,” he promised. “This government is giving patients easier, quicker and more convenient care, wherever they live.”

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Why has Starmer axed NHS England?

Neighbourhood health services

The newly announced neighbourhood health services will provide “pioneering teams” in local communities, so patients can more conveniently access a full range of healthcare services close to home.

Local areas will be encouraged to trial innovative schemes like community outreach door-to-door to detect early signs of illness and reduce pressure on GPs and A&E.

The aim is to eventually have new health centres open 12 hours a day, six days a week to offer GP services as well as diagnostics, post-operative care and rehab.

They will also offer services like debt advice, employment support, stop smoking help or weight management.

More NHS dentists

Dentists will also be part of the plan, with dental care professionals part of the neighbourhood teams.

Dental “therapists” will carry out check-ups, treatments and referrals, while dental nurses could give education and advice to parents or work with schools and community groups.

Newly qualified dentists will be required to practice in the NHS for a minimum period, which they have said will be three years.

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‘Trust and confidence lost’ over grooming gang failures in Manchester, watchdog warns

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'Trust and confidence lost' over grooming gang failures in Manchester, watchdog warns

Despite making “significant improvements”, Greater Manchester Police (GMP) has lost the “trust and confidence” of some victims of grooming gangs, according to a report by the police watchdog.

Michelle Skeer, His Majesty’s Inspector of Constabulary, said that since 2019, when GMP started to review its non-recent child sexual exploitation investigations, “the force has improved its understanding and approach to investigating allegations of child criminal and sexual exploitation”.

The document, published today, said police have live investigations into “multi-victim, multi-offender” child sexual exploitation inquiries, involving 714 victims and survivors, and 1,099 suspects.

Grooming gangs scandal timeline

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‘Our chance for justice’

But despite recording improvements, a report by His Majesty’s Inspectorate of Constabulary and Fire & Rescue Services (HMICFRS) also identified:

• Various training gaps within the investigation team
• Lack of consistency in evaluating case files between social care, health and police
• Failures to initially support victims meant they had “lost trust and confidence” in police

The report was commissioned by the Mayor of Greater Manchester Andy Burnham in 2024 to evaluate whether police, councils and health services can protect children from sexual exploitation in the future.

More on Andy Burnham

Its release comes days after Sir Keir Starmer announced he was launching a new national inquiry into grooming gangs after previously arguing one was not necessary,

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Starmer to launch new grooming gang inquiry

The findings were issued as the final part of the CSE (child sexual exploitation) Assurance Review process which started in 2017. The first three reports examined non-recent child sexual exploitation in Manchester, Oldham and Rochdale.

Mr Skeer said that the force has been trying to improve its service to those who have experienced sexual exploitation, but previous failings have badly affected trust in GMP.

He said: “For some, trust and confidence in the police had been lost, and the force would not be able to rectify their experiences.

“It is vital that improvements are led by victims’ experiences, and if they do come forward, they are supported, protected and taken seriously.”

A recent report by Baroness Casey found a significant over-representation of Asian men who are suspects in grooming gangs in Greater Manchester, adding though authorities are in “denial” more needs to be done to understand why this is the case.

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Teen caught in child sex exploitation

Inspectors also said there were “training gaps” in some investigation teams and issues with data sharing, with local councils sometimes not willing to provide detectives with information, leading to “significant delays in investigations” into grooming gangs.

It cites problems with intelligence provided by Manchester City Council, which took months to arrive and “was so heavily redacted that some pages contained only a few words”, the report said.

Read more from Sky News:
Analysis: Badenoch’s grooming gangs outrage
Grooming survivor wants apology from Starmer

GMP is the only force in the country to set up a dedicated team to investigate grooming gangs. Called the Child Sexual Exploitation Major Investigation Team (CSE MIT) it has about 100 staff and a ringfenced budget.

In October 2024, the force told inspectors there were 59 live multi-victim, multi-offender child sexual exploitation investigations, of which 13 were being managed by the CSE MIT.

The report adds: “The force fully accepts that it made mistakes in the past.

“It has taken positive and effective steps to learn from these mistakes and improve how it investigates recent and non-recent child sexual exploitation.”

Separately, the Baird Inquiry published in July 2024 found officers at GMP were abusing their power – making unlawful arrests, unlawful and demeaning strip searches, sometimes treating victims as perpetrators, and traumatising those who have suffered sexual abuse or domestic violence.

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