The recent major crash of the cryptocurrency market is again causing the crypto industry to negatively attract the attention of regulators around the world. The President of the European Central Bank, Christine Lagarde, today called for further regulation of, among other things, bitcoin (BTC) and the decentralized finance (DeFi) sector.
ECB and crypto regulation
Today Lagarde gave a speech to the European Parliament. During this speech, Lagarde very explicitly called for further regulation of the crypto industry. According to her, crypto assets such as bitcoin and DeFi could pose a serious threat to the rest of the financial world.
La Presidente de la BCE appelle à un MICA 2 pic.twitter.com/umywn7k99g
— Aurore Lalucq (@AuroreLalucq) June 21, 2022
“Innovations in these undiscovered and uncharted areas put consumers at risk, where the lack of regulation often covers fraud, wholly illegitimate valuation claims and very often speculation and criminal transactions.”
New crypto regulations?
There is already a regulatory framework ready from the European Union to soon regulate the crypto industry, the so-called Markets in Crypto Assets (Mica)† According to Lagarde, this legislation already falls short and therefore a MiCA II would be necessary in the short term. Mainly strike and loan of crypto should be regulated with this.
“MiCA II should regulate crypto asset staking and lending activities, which are sure to increase”
Lagarde clearly believes that DeFi is a “real risk to financial stability” and that it should be fully subject to a second regulatory framework. That way, the world’s most prominent cryptocurrency, bitcoin, which obviously doesn’t have one definable issuer, would also fall under this regulatory framework in the future.
“Bitcoin will not fall under MiCA I, but hopefully you will take that into account for MiCA II.”
It does not seem to be a coincidence that Lagarde is calling so urgently for regulation of the crypto sector right now. In the recent past we have seen the demise of the Terra (LUNA) network, but we also saw major problems with, among other things, the crypto lending platform Celsius† These kinds of scenes are obviously not to the liking of supervisors.
