• Thu. Feb 29th, 2024

Central Bank Suggests Norway Can Go Its Own Way on Crypto Asset Regulation

Central Bank Suggests Norway Can Go Its Own Way on Crypto Asset Regulation

Norges Bank, Norway’s central bank, has released its annual “Financial Infrastructure Report”. A significant portion of the report was devoted to crypto assets and the question of whether Norway should rely on international regulatory precedents to regulate its market.

The European Union’s Market in Crypto-Asset (MiCA) regulation will come into effect in a year or two and will “probably apply to Norway as well.” However, “the Ministry of Finance will assess the relevance and implementation of the EEA in Norway,” Norges Bank noted. Norway is a member of the European Economic Area, but not the European Union.

MiCA may not be sufficient for all crypto regulatory purposes, Norges Bank said:

“Such targeted regulation often fails to capture the risk associated with new technological developments and activities and therefore may not be sufficiently resilient.”

The bank cited shortcomings in decentralized financial regulation as an example of this problem in MiCA.

Related: The State of Crypto in Northern Europe: Hostile Scandinavia and the Vibrant Baltics

The quality of control has a psychological effect. “It is necessary to understand that the probability of detection is sufficiently high for participants to have a retrospective disciplinary effect,” it said. That is relevant to other authorities, but the bank will “contribute to such assessments,” it added.

Further development of Mica will be driven by national interests that Norway does not share, the paper said. Therefore, “Norwegian authorities should assess whether to proceed more quickly rather than waiting for international regulatory solutions.”

Without such a measure, the bank said, “private entities” could have undue influence over Norwegian regulations such as taxation.

Lack of familiarity with crypto-assets, due to their newness, can hinder good regulation. One of the great questions surrounding crypto is the extent to which current legislation is capable of effectively regulating it, the bank continued.

The central bank is continuing to research the digital currency and will publish its findings later this year, the bank said.

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