June 7, 2023

The Central Bank of Norway proposed to create its own rules for the crypto industry in addition to the MiCA bill

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The Central Bank of Norway proposed to create its own rules for the crypto industry in addition to the MiCA bill

The Norwegian Central Bank (Norges Bank) proposed not to wait for the entry into force of the draft law on the regulation of cryptocurrencies in the European Union (MiCA), but to develop their own rules for their supervision.

Norges Bank has released its annual “Report onFinancial Infrastructure 2023”, a significant part of which is devoted to crypto assets and the question of whether Norway should rely on international regulation of cryptocurrencies. The MiCA bill, which received the unanimous support of the EU finance ministers, will enter into force only by 2024, so the central bank considers it necessary to start developing a state strategy for overseeing cryptocurrencies.

Deputy Governor of the Central Bank of Norway Paul Longva(Pål Longva) explained that the Norwegian authorities should act quickly and not wait for international regulatory decisions. MiCA includes extended oversight of Virtual Asset Service Providers (VASPs), focusing on crypto market abuse, consumer protection, and financial stability, but does not cover decentralized finance (DeFi). Longva is convinced that Norges Bank can contribute to the regulation of the industry by specifying the legislation for cryptocurrencies, which should take into account systemic risks and enforcement problems specific to cryptoassets.

Longva also noted the risks of cyberattacks associated withpayment systems. In this regard, Norges Bank, together with the Norwegian Financial Supervisory Authority, launched a pilot project to test the cyber resilience of banking and payment systems. The Central Bank recognizes that the payments landscape is constantly evolving with new payment methods and payment service providers emerging. Therefore, Norges Bank plans to more actively explore the possibility of launching its own digital currency.

The Central Bank of Norway has been interested in issuing a digital Norwegian krone since 2017. However, only last year the central bank launched a regulatory sandbox to test it.