In one of the most difficult periods for the cryptocurrency market, signals from regulators and financial institutions do not stop. On this occasion, Christine Lagarde assured that cryptocurrencies have no value or basis and therefore must be finally regulated.
For Ms Lagarde, regulation is very important because it can prevent people from using their savings to invest in cryptocurrencies, which are highly speculative assets. And while she did not mention any specific statistics, thanks to the level of cryptocurrency trading on the continent, it has been found that a large number of people are investing a lot of money in this asset class, which is a general risk for the President of the European Central Bank.
Ms. Lagarde recently appeared on a Dutch TV show to talk about economic issues, and cryptocurrencies were one of the most important topics. And she added that she was worried that people would lose all their money in cryptocurrency. The problem for Lagarde is that most people who invest in cryptocurrencies do not yet realize the risks they are taking by investing in this asset class.
At the moment, investing in cryptocurrencies is practically free in most countries of the world, and technically anyone can buy cryptocurrencies. This means that the levels of risk for people who are less knowledgeable on the subject increase dramatically. This is why regulation is needed to prevent increased risk for investors.
Christine Lagarde against cryptocurrencies
This is not the first time Christine Lagarde has spoken about cryptocurrencies. She has commented on the asset class in the past and has never said anything too positive. She has always taken a rather closed stance on this issue, and last year, when we repeatedly spoke about the possibility of developing a digital euro, she seemed to be one of the least convinced on this issue.
After some silence, Ms. Lagarde’s comments came at a rather serious moment for the market. In the midst of the cryptocurrency turmoil, and with currencies like Bitcoin and Ethereum being the most important in the market, losing almost 50% of their value from previous highs, this is a moment that could help Lagarde confirm the theory that cryptocurrencies are bad and should be regulated.
The thing is, it’s not just Christine Lagarde. Generally speaking, regulators around the world are paying closer attention to cryptocurrencies. We hear a lot about oversight of this asset class now, and most of them are looking to regulate it to limit their use.
How much time is left before cryptocurrency regulation?
The topic of cryptocurrency regulation has been raised countless times, and while many central bank regulators and presidents of financial institutions have spoken out on the subject, few have succeeded in regulating cryptocurrencies or taken significant steps towards that goal.
Much of the backlog in cryptocurrency regulation is due to the fact that it is largely uncharted territory for regulators. Therefore, the integration of cryptocurrencies into the traditional economic structure and its laws is a difficult task.
And in the case of Europe and, in particular, the Central Bank, everything does not look very positive for the market. First of all, the President of the Central Bank is publicly opposed to cryptocurrencies and has already spoken several times about the development of a digital dollar, which could appear on the market in about four years if everything goes according to plan.
The fact that a central bank currency is being considered means that competitors should be forced out of the market, as China did a few months ago by banning all cryptocurrency-related activity. Moreover, according to Ms. Lagarde, this is an asset class with no value and no collateral, so regulation is the only solution.
And while it’s currently unclear which path Christine Lagarde will take, it’s possible that some restrictive regulation is on the horizon that will ultimately impact the market and its investors.
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