The Dutch Authority for Financial Markets (AFM) has issued a strong warning on the dangers of pump-and-dump schemes in the bitcoin industry as the European Union gets ready to apply the Markets in Crypto-Assets Regulation (MiCA) on December 30. These strategies nevertheless seriously compromise market integrity as they artificially increase the value of a crypto asset by means of deceptive data.
Since the AFM has been actively looking at numerous pump-and-dump strategies recently, tough enforcement after MiCA takes effect will be facilitated. Under MiCA, the EU will specifically forbid manipulative techniques like pump-and-dump activities; the AFM will therefore assume regulatory control in the Netherlands.
Usually working by disseminating false or exaggerated information to boost a coin, pump-and-dump tactics encourage investors to buy at inflated prices. Those behind the strategy sell off their interests after the price peaks, therefore devaluating assets for other investors. Member of the AFM board Hanzo van Beusekom underlined that these programs undermine confidence in the crypto market, which is essential for the long-term survival of digital assets.
MiCA wants to improve openness, protect investors, and help the bitcoin market to flourish. Though a progress, the AFM has admitted that MiCA would not totally remove the hazards in the crypto market.
Concerns over the wider influence of MiCA on the sector also exist; some speculate that it would cause crypto companies to consolidate and force businesses to move to areas with more relaxed rules, including the Middle East. As the MiCA enforcement date draws near, the AFM stays dedicated to making sure market players follow the new guidelines and protect themselves from fraudulent behavior.
