ECB President Calls On Authorities To Hasten Regulation On The Crypto Market

ECB President Calls On Authorities To Hasten Regulation On The Crypto Market

June 23, 2022 0 By Jeanine Sanchez

Global authorities are becoming more interested in happenings in the crypto market industry following recent events. Thus, they will likely facilitate their moves to developing crypto regulatory policy. However, most might turn their full attention to a sub-sector of the crypto space – crypto lending and staking.

The reason is due to the insolvency issues surrounding the top crypto lending platform, Celsius. Nevertheless, European Central Bank (ECB) president Christine Lagarde has weighed in on the matter. She expressed her views during a European parliamentary session on June 21.

According to her, there is a need for all authorities to be more concerned about regulating the crypto market. Her opinion comes about seven days after Celsius announced a pause on withdrawals from its platform.

A Second MiCA Framework Is Due Now – Lagarde

Lagarde noted that it has become necessary for the board of the markets in crypto assets (MiCA) to start developing the follow-up to the first framework. According to her, work on developing the second framework has become necessary due to recent events in the crypto sector.

The first framework by the MiCA would become binding on all EU nations by 2024. Lagarde said, “MiCA II needs to cover crypto lending and staking policies.” It is worth noting that Lagarde’s comments regarding the development of a MiCA II framework is a result of her other position.

Besides being ECB president, she is also the head of the European Systemic Risk Board (ESRB) head. Lagarde alleges that investors are taking unnecessary risks by investing in unregulated products. Also, consumers are taking huge risks by purchasing products without regulatory approval.

She said a lack of regulation would result in many fraudulent transactions and criminal intents. Also, these unregulated innovators can falsify the valuation of their firm to attract and dupe investors.

DeFi Can Destabilize Financial Stability

While speaking at the European parliament, Lagarde also claimed that DeFi threatens the stability of global financial infrastructure. Hence, it is another reason the development of the next MiCA framework needs to start immediately.

The new framework would also cover regulations regarding Defi and other third-party financial tools. Lagarde also stated that the next MiCA framework would cover the issuance of bitcoin and other bitcoin-related policies.

According to her, there is a need to have a definable issuer for bitcoin. The ECB recently claimed that speculations drive the crypto market, and cryptos have no value.

Massive Bitcoin Withdrawals On Exchanges

Intense BTC selloffs on exchanges as the downturn in the crypto market continued on Wednesday. The latest Glassnode weekly crypto market report states that more than $2.1B worth of BTC left exchanges in the last week.

Based on the current BTC price, that amount is equivalent to 108,200 BTC that BTC holders sold from June 14 to date.