##ooij, anders ryden, jurgen schaaf and anton van der kraaij for their input and comments. 2. panetta, f. ( 2022 ), “ for a few cryptos more : the wild west of crypto finance ”, speech at columbia university, new york, 25 april. 3. a complex, interlinked but mostly unregulated crypto ecosystem of miners, wallets, tumblers and exchanges has developed, and a range of ancillary crypto services mimicking traditional financial services have come to the fore in the form of decentralised finance ( defi ). with defi it is now possible, for example, to lend, borrow and earn returns when “ staking ” or “ yield farming ” crypto - assets. 4. as warren buffett famously noted, “ only when the tide goes out do you discover who ’ s been swimming naked ”. 5. for example, transactions involving bitcoins are lengthy procedures, and the number of operations that can be completed over a specific period of time is comparatively very limited. 6. for example, producing and trading bitcoin alone wastes huge amounts of energy : the equivalent of the entire annual electricity consumption of a country that has millions of inhabitants, like belgium. see cambridge bitcoin electricity consumption index. 7. europol notes that the illicit use of crypto - assets is predominantly associated with money laundering purposes, the ( online ) trade of illicit goods and services, and fraud. see europol ( 2021 ), “ cryptocurrencies : tracing the evolution of criminal finances ”, europol spotlight report series. chainalysis estimates that the amounts of crypto - assets exchanged for criminal purposes exceeded usd 15 billion in 2021 and notes that criminal activity appears to be more resilient in the face of price declines, with illicit volumes down just 15 %, year on year, in the first half of 2022, compared with 36 % for legitimate volumes. in the case of hacking, the value stolen was even higher in the first half of 2022 compared to the first half of 2021. see chainalysis ( 2022 ), “ mid - year crypto crime update : illicit activity falls with rest of market, with some notable exceptions ”, august. chainalysis estimates are conservative. europol emphasises that “ estimations from chainalysis are based on their own attribution datasets where transactions are tagged as illicit

by segregating any crypto - related activities of supervised intermediaries. the eu ’ s regulation on markets in crypto - assets ( mica ) is leading the way in building a comprehensive regulatory framework. mica will regulate stablecoins, crypto - assets other than stablecoins, and cryptoasset service providers. it will subject stablecoin issuers of e - money tokens [ 32 ] and asset - referenced tokens [ 33 ] to licensing and supervision. and it will regulate the reserve assets backing stablecoins in order to contain their risks. in turn, the regulation requires that buyers of crypto - assets are informed about the inherent risks involved. it is crucial that the regulation enters into force as soon as possible. looking ahead, the regulation of crypto activities will have to be adapted to the continuous evolution of crypto risks. given the time needed to design and apply new legislation, it is important to empower regulators, overseers and supervisors to adjust their instruments to keep pace with market and technological developments. the ecb is not responsible for regulating investment activities. but we are responsible for overseeing european payment systems, and we have already taken action in this field. our oversight framework for payment instruments, schemes and arrangements – the pisa framework – that was launched last year addresses the risks of stablecoins and other crypto - assets for payment systems. since crypto - assets know no borders, their regulatory framework must be global. this requires rapid implementation of the financial stability board ’ s recommendations to make the regulatory, supervisory and oversight approaches to crypto activities consistent and comprehensive across different countries. swift progress is also needed to finalise the basel committee on banking supervision ’ s framework for the prudential treatment of banks ’ crypto - asset activities. addressing and internalising social risks authorities also need to address the significant social costs of crypto - assets, such as tax evasion, illicit activities and their environmental impact. [ 36 ] the use of crypto - assets for money laundering and terrorist financing could be prevented by applying the standards set by the financial action task force. the other task is to ensure that the taxation of crypto - assets is harmonised across jurisdictions and consistent with how other instruments are taxed. [ 38 ] in europe, given the negative externalities that crypto activities can generate across multiple member states, the eu should introduce a tax levied on crossborder crypto issuers, investors and service providers. this would