The European Union’s markets watchdog, the European Securities and Markets Authority (ESMA), is reportedly pushing for mandatory external audits of cyber defenses for crypto companies in an effort to enhance consumer protection in the face of increasing security breaches. According to a report from the Financial Times, ESMA is advocating for stricter cyber protection rules and urging EU lawmakers to amend upcoming regulations to require third-party audits assessing the resilience of crypto firms against cyber attacks.
The move comes as cybersecurity has become a pressing issue for the crypto industry, with hackers stealing almost $1.4 billion in 2024, nearly double the amount stolen in the previous year. Data from TRM Labs shows that the number of hacking incidents has increased by 2.8% compared to 2023, with the average value lost per hack surging by 79.5% to $10.6 million in 2024. This trend highlights a growing concern as cybercriminals increasingly target centralized exchanges.
Under the upcoming Markets in Crypto-Assets framework, crypto firms will be required to secure licenses from EU member states by December 31 and demonstrate robust controls against money laundering and other financial crimes. This regulatory framework has already begun to reshape the industry, with Coinbase announcing plans to remove non-compliant stablecoins from its European exchange by year-end.
However, concerns about the regulations persist among industry leaders. Paolo Ardoino, CEO of Tether, the largest stablecoin issuer, warned that strict cash reserve requirements could create systemic risks for banks. The trend of delisting is not limited to stablecoins, as Kraken recently announced plans to suspend trading for privacy-focused Monero (XMR) in the European Economic Area, following similar moves by Binance and OKX.
Overall, the push for enhanced cybersecurity audits for crypto firms by ESMA reflects a growing recognition of the need to protect consumers and strengthen the resilience of the crypto industry against cyber threats. As the industry continues to evolve and face new challenges, regulatory measures like these will play a crucial role in ensuring the security and stability of the market.