Published: January 17, 2025 at 2:11 pm
Updated on January 17, 2025 at 2:11 pm
DORA, the Digital Operational Resilience Act, is about to shake things up for cryptocurrency businesses in Europe. Starting January 17, 2025, it’ll enforce tough cybersecurity and operational resilience standards across the board. But what does this mean for startups, and how will it affect the crypto currency exchange trading landscape?
What is DORA? Simply put, it’s a regulation aimed at making financial institutions, including crypto businesses, more resilient against cyberattacks and operational failures. This is part of a larger framework to stabilize the EU financial system, sitting alongside regulations like MiCA.
For smaller startups, the most immediate impact of DORA is going to be the costs associated with compliance. It’s not cheap to bump up your security measures or manage risk better.
A lot of the online crypto trading platforms might find it hard to scrape together the cash needed to meet DORA’s requirements. And the costs won’t just affect them. Startups that sell services to these platforms will also feel it in their pockets. But, hey, maybe some of this will help the startups that are able to meet the standards?
That said, DORA does focus on operational resilience, which could actually help crypto startups. If they can weather disruptions better, they might gain some credibility and investor trust. DORA might be seen as a necessary move to keep the industry afloat, but it could also stymie innovation.
DORA adds another layer of regulatory oversight, especially around how companies manage their third-party service providers. If you’re a small startup that depends on external firms for things like IT or cybersecurity, good luck.
DORA will require platforms to ensure that their third-party partners also comply with its standards. That could mean needing more cash to keep an eye on these services. But maybe it also ensures that people are doing things right?
On the bright side, by making sure everyone’s playing by the same rules, DORA could help create a safer investment climate. If service providers must meet high cybersecurity and operational resilience standards, the result might be a less risky market. More institutional investors could come knocking.
Now, what about investors? DORA has its ups and downs. While it aims to improve security and offer some safeguard for investors, the compliance burdens are no joke.
DORA’s influence isn’t limited to just EU-based firms. It’s also likely to affect how global investors see EU exchanges. By setting high cybersecurity and operational standards, EU-based exchanges could come to be viewed as leaders in regulatory compliance.
DORA requires that EU cryptocurrency exchanges meet high standards for managing risks and conducting resilience tests, which could enhance their perceived reliability.
The combination of DORA and MiCA signifies a more mature crypto market, which could make EU exchanges more appealing to institutional investors and users who want stability.
By impacting global tech providers for the EU financial sector, DORA could set a new standard for digital operational resilience, influencing how other markets regulate their crypto sectors.
With a focus on third-party risk management, DORA aims to reduce systemic risks within the crypto ecosystem. This added layer of oversight could reassure global stakeholders about the stability of EU-based crypto exchanges, making them more attractive for international investment.
DORA is coming, and it’s going to impact the cryptocurrency landscape in the EU. For startups, it means increased compliance costs and operational challenges. For investors, it offers both security and potential drawbacks. As the regulatory environment evolves, so too will the crypto market’s perception and dynamics.
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