ESMA labels MEV as ‘market abuse’ in latest regulatory consultation paper

The European Union’s Securities and Markets Authority has recommended treating miner-extracted value (MEV) as a form of market abuse under the MiCA regulatory framework.

The European Union’s Securities and Markets Authority (ESMA), one of three regulatory bodies governing the region’s financial landscape, has published the findings of its third consultation package outlining crypto regulatory measures under the Markets in Crypto Asset (MiCA) framework.

As part of its proposed guidelines, the ESMA suggested that miner-extractable value (MEV), an arbitrage strategy that relies on re-ordering transactions within a block to create the maximum profit margin for validators and third-party builders, should be treated as a form of market abuse under existing MiCA rules.

Section 19 of the ESMA’s paper says, “MiCA is clear when indicating that orders, transactions, and other aspects of the distributed ledger technology may suggest the existence of market abuse e.g., the well-known Maximum Extractable Value (MEV) whereby a miner/validator can take advantage of its ability to arbitrarily reorder transactions to front-run a specific transaction(s) and therefore make a profit.”

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