Report shows growing investment in surveillance for crypto trading firms

The report, titled `The Impact of MiCA on Crypto Market Surveillance: Insights and Challenges,` was commissioned by Eventus and based on a survey and interviews with senior executives from 68 firms involved in crypto trading, including buy-side, sell-side, and exchanges. It indicates a growing industry-wide trend towards establishing market surveillance systems.

Research findings

MiCA is one of the first comprehensive regulatory frameworks for cryptocurrency trading in a major financial jurisdiction, which will impose new requirements on market participants in various areas. The study found that only 9% of the firms subject to MiCA were fully prepared, while 25% had not started any preparations. With MiCA set to take effect at the end of the year, firms must determine if they fall under its scope and begin compliance preparations promptly.

In terms of market surveillance, MiCA's requirements are aligned with those set out in the EU’s Market Abuse Regulation (MAR). Many firms, especially those newly subject to MiCA, will face significant operational challenges in establishing the necessary systems for compliance. The report highlights that a considerable number of firms remain uncertain about whether they are within MiCA’s scope.

The cryptocurrency market is already advancing in market surveillance capabilities, with 57% of firms not covered by MiCA already having surveillance systems in place. Despite ongoing consultations on the final technical standards, a quarter of firms subject to MiCA have not started preparations, nearly a third are at an early stage, and just over a third are in advanced stages of preparation.

Firms investing in new systems are typically outsourcing to third-party software vendors, with 64% planning to do so. However, many firms anticipate challenges in selecting appropriate vendors for their specific needs.

The primary challenges posed by MiCA include compliance costs and the difficulty of finding skilled personnel. MiCA is expected to be a significant operational hurdle for firms not already compliant with MIFID II, prompting many to seek assistance from third-party vendors.