European Central Bank President Christine Lagarde came down on the side of regulating digital currencies, saying crypto is “based on nothing,” Bloomberg reported Friday (May 20).
She said regulators should pass new rules to make sure people are less likely to speculate on cryptocurrencies with their life savings. Lagarde said she’s been concerned about people losing their money when they have “no understanding of the risks.”
Crypto has been facing some tough times, as amid the collapse of the UST stablecoin, most cryptocurrencies are down sharply from peaks from the end of 2021, including big names like bitcoin and ether.
And the asset class is also, at the same time, seeing more opposition from regulators globally, who are worried about the impact on the financial system.
Lagarde has said she’s “skeptical” of the value of crypto. “It is worth nothing, it is based on nothing, there is no underlying asset to act as an anchor of safety,” she said. She contrasted it with the possible debut of the European Central Bank (ECB)’s digital euro, which might come in the next few years.
“The day when we have the central bank digital currency out, any digital euro, I will guarantee — so the central bank will be behind it and I think it’s vastly different than many of those things,” Lagarde said.
PYMNTS wrote recently that the EU would be looking into ways to make sure digital assets won’t be used to dodge sanctions against Russia.
The bloc wants to put financial penalties on Russia for its invasion of Ukraine. Bruno Le Maire, French finance minister, said things were being talked about in videoconferences to make the sanctions more effective.
At the time, Lagarde was quoted saying legislation would be a plus, so that firms issuing crypto assets wouldn’t deal with Russian clients.