According to Cointelegraph, the Netherlands Financial Market Authority (AFM) warned of the risk of pump and dump of cryptocurrencies that will be implemented soon. According to the official AFM press release, the Crypto Assets in the Market Regulation (MiCAR) will come into effect on December 30.
MiCAR will explicitly prohibit market manipulation within the EU, such as pump and dump. The AFM will be responsible for monitoring and enforcing the new regulations.
MiCAR aims to improve transparency and market integrity in the crypto industry by prohibiting manipulative practices. The AFM has recently investigated several pump and dump cases and plans to strictly enforce MiCAR once it comes into effect.
Pump and dump is a strategy to artificially inflate the price of an asset by spreading misleading information, usually through social media. Promoters buy large quantities of an asset at low prices and then sell it at a higher price after hyping it up, causing investors to lose money.
Hanzo van Beusekom, executive board member of the AFM, said pump and dump undermines market trust, which is crucial to the long-term potential of digital assets.
The AFM is aligned with Europeâs upcoming MiCA bill, but the regulatory framework could lead Web3 companies to move to the Middle East. Fideum CEO Anastasija Plotnikova said this could lead to crypto companies moving to the Middle East and make the Web3 industry more like traditional finance.