EU considers MEV as market abuse, feedback deadline by the end of June

The European Securities and Markets Authority (ESMA) continues to monitor the issue of Miner Extractable Value (MEV) and has officially classified MEV as a case of market abuse in the MiCA draft after discussions.

EU regulatory agencies discuss MEV issue: Reordering blockchain transactions could constitute market abuse

MEV Regarded as Market Abuse by the EU

According to a tweet by Patrick Hansen, Director of Policy at Circle, ESMA recently released its third consultation, part of which covers standards related to detecting and reporting market abuse in crypto assets under MiCA.

On page 10 of the document, ESMA explicitly states:

The maximum extractable value (MEV) is well known, miners/validators can profit by front-running specific transactions through their ability to arbitrarily reorder transactions, indicating market abuse.

This not only affects the public chain itself, but also regulated crypto companies in the EU, including exchanges, brokers, etc., all of which need to detect and report instances of MEV through complex "suspicious transaction or order reports."

Patrick Hansen believes that implementing this in practice poses certain difficulties.

Furthermore, ESMA suggests that countries outside the EU should also cooperate in sanctioning market abuse, with MEV participants potentially facing investigations not only from the EU but also from international authorities.

Crypto Industry Urged to Provide Feedback

While this is still in the draft stage, it will be finalized in the coming months, and ESMA encourages stakeholders to provide feedback on the proposal by June 25th.

Patrick Hansen also strongly recommends that relevant MEV participants actively consult and engage with ESMA, as this is crucial for formulating effective and practical regulatory measures.

Ambassador of the non-custodial liquidity protocol Hatom Protocol, @Davyegld, pointed out that certain public chains support MEV due to a lack of neutrality and economic advantages, even encouraging MEV behavior. The crypto space has recently started evaluating the value of public chains based on the occurrences of MEV.