AFM Prepares for MiCA Rollout, Warns of Crypto Pump-and-Dump Schemes in the Crypto Market

The Dutch Authority for the Financial Markets (AFM) has issued a warning regarding the risks posed by crypto pump-and-dump schemes as Europe prepares to enforce the Markets in Crypto-Assets Regulation (MiCA). The AFM, per their press release, voiced concerns about manipulative practices in the sector and hinted at the good MiCA will do once it comes into effect.

DUTCH REGULATOR CALLS OUT CRYPTO PUMP-AND-DUMPS BEFORE MiCA

The Dutch Authority for Financial Markets (AFM) is giving crypto traders a heads-up: stop with the pump-and-dumps before the EU’s MiCA regulations hit in December.

MiCA, which stands for Markets in Crypto-Assets, is… pic.twitter.com/0TRBYvXWkH

— Mario Nawfal’s Roundtable (@RoundtableSpace) September 29, 2024

Per the AFM’s official statement, MiCA is set to come into full swing across the European Union by December 30. This regulation is gunning to beef up transparency and market integrity within the crypto industry. Under MiCA, practices such as pump-and-dump schemes will be outrightly banned, and the AFM will be responsible for overseeing and enforcing these regulations in the Netherlands.

The AFM’s Position on These Schemes

Pump-and-dumps happen when someone artificially inflates the price of a crypto asset by spreading misleading or exaggerated information, mostly via social media. Once the price has ballooned due to the hype, those masterminding the scheme sell off their holdings at a profit, leaving unsuspecting investors with assets with no real worth.

In recent months, the AFM has conducted several investigations into such schemes, preparing to take a firm stance against them once MiCA becomes law. Hanzo van Beusekom, a member of the AFM’s executive board, stressed that these practices “undermine trust” in the crypto market, which is crucial for the long-term potential of digital assets.

MiCA’s introduction is seen as a step forward in maturing the crypto market and solidifying investor protection. However, the AFM has made it super clear that while MiCA will address many risks, it won’t eliminate them entirely.

“The Markets in Crypto-Assets Regulation (MiCAR) is designed to elevate the crypto sector’s maturity and enhance investor protection. However, MiCAR will not eliminate all risks in the crypto sector,” the AFM stated.

Concerns Over Crypto Consolidation and Relocation

As MiCA draws close, concerns are being raised about its possible weight on the larger crypto ecosystem. Anastasija Plotnikova, CEO and co-founder of Fideum shared her views with Cointelegraph, expressing concerns that the regulation could lead to big-time consolidation within the industry. She suggested that the regulatory environment might push some Web3 firms to relocate to regions with more favorable conditions, such as the Middle East.

Plotnikova emphasized that MiCA could make the crypto space more similar to traditional finance, potentially stifling the decentralized nature of Web3 technologies.

With MiCA’s implementation just months away, the AFM remains focused on ensuring compliance and protecting market participants from fraudulent practices.