MiCA Slashes Crypto Fraud by over 50%, Redirects Criminal Focus

by Jared Kirui
  • The number of fraud cases in crypto has declined while those in payments have increased.
  • Crypto regulations are redirecting cybercriminals to other less-regulated sectors.
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Fraudulent activities have shifted away from the cryptocurrency space, marking a significant decline of 51% in attacks. This change is largely attributed to the implementation of the Market in Crypto Asset (MiCA) regulation. With fraudsters finding it increasingly challenging to operate in the crypto market due to tightening regulations, their focus has turned to exploiting vulnerabilities in the payments sector.

The global identity intelligence company headquartered in Israel, AU10TIX, recently released a report about the state of the global fraud identity for the third quarter of 2023. This report delved into the ramifications of MiCA, emphasizing enhanced investor protection.

Moreover, it unveiled how regulatory crackdowns in the crypto space are redirecting fraud efforts toward the payments sector. The report detailed a surge of 56% in fraud in the payments sector, driven by factors like increased digital transaction volumes in the Asia Pacific (APAC) region and the economic recovery in North America.

The Impact of Organized Fraud Globally

Ofer Friedman, AU10TIX's Chief Business Development Officer, mentioned: "Organized crime groups are exploiting gaps in detection technology to orchestrate financial fraud on a massive level simultaneously across multiple businesses and geographies. Actual fraud rates are multiple times higher than reported."

Meanwhile, in the APAC region the rise in digital transactions, coupled with their complexity due to diverse economies and cross-border transactions, creates difficulties in verifying identities. In the payments sector, North America faces significant challenges, a scenario that presents potential loopholes for fraudsters.

The higher occurrence of attacks in North America is linked to fraudsters taking advantage of economic recovery and increased spending in the region.

Risks despite MiCA's Ambitions

Although Crypto investors anticipate safety nets with MiCA, a recent statement from the European Securities and Markets Authority (ESMA) unveiled a concerning reality. ESMA has urged preparations for MiCA's implementation, cautioning retail investors that the regulations will not shield their investments until December 2024, Finance Magnates reported.

MiCA aims to standardize crypto-asset activities across the EU to strengthen consumer protection and bolster market stability. ESMA has set expectations for national authorities and crypto-asset service providers to align their supervisory practices.

Despite MiCA's ambitions, ESMA has cautioned about persisting inherent risks within crypto-assets even after its implementation. The regulator has underscored that full protections for MiCA will not happen until the regulation is wholly enforced.

Officially approved in May 2023, MiCA has been slated for enactment by December 2024, with a potential extension of the transitional period until July 2026. This is contingent upon the decisions of the member states.

The EU reached an important milestone in its efforts to regulate crypto when the EU Council adopted MiCA in May. This step signified a concerted effort to protect investors, promote environmental sustainability, and curb money laundering in crypto.

Fraudulent activities have shifted away from the cryptocurrency space, marking a significant decline of 51% in attacks. This change is largely attributed to the implementation of the Market in Crypto Asset (MiCA) regulation. With fraudsters finding it increasingly challenging to operate in the crypto market due to tightening regulations, their focus has turned to exploiting vulnerabilities in the payments sector.

The global identity intelligence company headquartered in Israel, AU10TIX, recently released a report about the state of the global fraud identity for the third quarter of 2023. This report delved into the ramifications of MiCA, emphasizing enhanced investor protection.

Moreover, it unveiled how regulatory crackdowns in the crypto space are redirecting fraud efforts toward the payments sector. The report detailed a surge of 56% in fraud in the payments sector, driven by factors like increased digital transaction volumes in the Asia Pacific (APAC) region and the economic recovery in North America.

The Impact of Organized Fraud Globally

Ofer Friedman, AU10TIX's Chief Business Development Officer, mentioned: "Organized crime groups are exploiting gaps in detection technology to orchestrate financial fraud on a massive level simultaneously across multiple businesses and geographies. Actual fraud rates are multiple times higher than reported."

Meanwhile, in the APAC region the rise in digital transactions, coupled with their complexity due to diverse economies and cross-border transactions, creates difficulties in verifying identities. In the payments sector, North America faces significant challenges, a scenario that presents potential loopholes for fraudsters.

The higher occurrence of attacks in North America is linked to fraudsters taking advantage of economic recovery and increased spending in the region.

Risks despite MiCA's Ambitions

Although Crypto investors anticipate safety nets with MiCA, a recent statement from the European Securities and Markets Authority (ESMA) unveiled a concerning reality. ESMA has urged preparations for MiCA's implementation, cautioning retail investors that the regulations will not shield their investments until December 2024, Finance Magnates reported.

MiCA aims to standardize crypto-asset activities across the EU to strengthen consumer protection and bolster market stability. ESMA has set expectations for national authorities and crypto-asset service providers to align their supervisory practices.

Despite MiCA's ambitions, ESMA has cautioned about persisting inherent risks within crypto-assets even after its implementation. The regulator has underscored that full protections for MiCA will not happen until the regulation is wholly enforced.

Officially approved in May 2023, MiCA has been slated for enactment by December 2024, with a potential extension of the transitional period until July 2026. This is contingent upon the decisions of the member states.

The EU reached an important milestone in its efforts to regulate crypto when the EU Council adopted MiCA in May. This step signified a concerted effort to protect investors, promote environmental sustainability, and curb money laundering in crypto.

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