The European Securities and Markets Authority (ESMA) regards MEV as a clear example of market abuse under MiCA regulations.
MEV is treated as clear example of illegal market abuse by EU draft standards specifying MiCA rules.
ESMA (the EU Securities & Markets Authority) has recently published its third consultation package outlining its proposed technical standards detailing how to implement some of… pic.twitter.com/2CMGKflGw0
— Patrick Hansen (@paddi_hansen) May 27, 2024
EU cryptocurrency regulation expert Patrick Hansen cited the ESMA draft document on X:
“…known as maximum extractable value (MEV), which allows a miner/validator to exploit their ability to arbitrarily alter the order of transactions to preemptively execute a specific operation and thus profit, clearly indicates the existence of market abuses.”
According to the report, nearly all regulated crypto companies in the EU, such as exchanges and brokers, will be required to detect instances of MEV and report them in comprehensive “suspicious transaction or order reports.” Hansen noted that the template alone took ESMA six pages.
Those involved in MEV activities may face investigation and enforcement actions in the EU. ESMA also anticipates collaborating with authorities in other jurisdictions to penalize offenders.
“These are only draft standards for now, but they will be refined in the coming months. ESMA invites stakeholders to provide feedback on this proposal by June 25,” Hansen remarked, urging participation in the discussion.
Earlier, Ethereum co-founder Vitalik Buterin identified MEV as one of the three main issues threatening the network’s decentralization.