Concerns have been raised by ESMA regarding the practice of Maximum Extractable Value (MEV) in the context of blockchain transactions, suggesting that it could be viewed as market abuse under the MiCA regulation. The reorganization of transactions by blockchain operators for profit optimization is considered a potential issue by the regulatory body, extending market abuse rules to include operational blockchain activities, like Frontrunning or sandwich attacks.
While the MiCA regulation does not explicitly address MEV, ESMA believes it falls under its jurisdiction. There is acknowledgment that MEV can raise concerns about market integrity and facilitate abusive practices like Frontrunning, warranting attention from regulators.
Industry's Refined Perspective on MEV
In contrast to ESMA’s stance, some stakeholders within the crypto industry argue for a more nuanced understanding of MEV. They emphasize that not all MEV scenarios should be automatically labeled as market abuse, as many are essential to incentivize validators and maintain the blockchain network's functionality. Overregulation that broadens the scope of MiCA to include all MEV activities is cautioned against by industry experts.
Calls for ESMA to provide clear guidelines on what constitutes market abuse in MEV scenarios and the accompanying responsibilities have been made. A public consultation by ESMA is underway to address these concerns, with stakeholders urged to share their input before June 25 to help shape regulatory decisions.
