ECB President Christine Lagarde has called for the regulation of Bitcoin. She argued that the asset is “highly speculative” and has been used for money laundering in the past.
ECB President Calls for Bitcoin Regulation
The President of the European Central Bank (ECB) has said that Bitcoin needs to be regulated.
Speaking at the Reuters Next conference today, Christine Lagarde spoke of the digital currency’s speculative nature, as well as its use in money laundering. She said:
“[Bitcoin] is a highly speculative asset, which has conducted some funny business and some interesting and totally reprehensible money laundering activity”
Bitcoin has a reputation for being a high-risk, speculative investment, though, in recent months, the narrative surrounding the leading cryptocurrency has somewhat shifted.
Spurred on by celebrated billionaire investors like Paul Tudor Jones and public companies such as MicroStrategy, the asset’s use case as a “digital gold” store-of-value was widely discussed in 2020.
The arguments for investing in Bitcoin proved particularly attractive during Coronavirus, in an era when Central Banks like those Lagarde works for were printing trillions of dollars in an attempt to overcome the devastating economic effects of the pandemic.
In the midst of the crisis, Bitcoin proved its worth as a hedge against inflation. It’s up around 300% since the middle of last year.
Until 2020, the mainstream narrative surrounding Bitcoin often focused on its role as a potential vehicle for money laundering and other criminal activities.
That’s partly due to its prominence on Silk Road, the darknet drug marketplace that made headlines when it was closed by the FBI in 2013. Other dark web marketplaces have cropped up since, though nowadays, they often favor privacy coins such as Monero.
Regulation Coming to Crypto
It’s not the first time the ECB has taken a negative stance towards crypto innovation. In September, the ECB Crypto-Assets Task Force spoke of the threat of stablecoins.
Though Bitcoin remains the best-known cryptocurrency, digital assets that track the price of fiat currencies have received a significant amount of attention in recent months. In December, U.S. Congress called for regulating stablecoins via the controversial STABLE Act. Other governments have stated that they’re researching the technology.
In today’s conference, Lagarde insisted that regulation “has to be applied and agreed upon” globally, mentioning the G-7, G-20, and Financial Action Task Force (FATF) as potential parties that would reach a consensus.
She also spoke of the possibility of a digital euro, which was discussed in the ECB’s report in September. Before launching a digital form of the Europe-wide currency, the ECB will need “a good chunk of time to make sure that we have something that is safe,” she said.
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