ECB Chief Lagarde: Crypto and Defi Could Pose ‘Real Risks’ to Financial Stability

The president of the European Central Bank (ECB), Christine Lagarde, says crypto assets and decentralized concern (defi) person the imaginable to airs “real risks” to fiscal stability. She has immoderate regulatory suggestions to supplement Europe’s Markets successful Crypto Assets Regulation (MiCA) bill.

Lagarde connected Crypto Regulation

ECB President Christine Lagarde talked astir cryptocurrency regularisation astatine the European Parliament’s Committee connected Economic and Monetary Affairs proceeding Monday. She said:

We believe, arsenic we are embarking connected this enactment concerning crypto assets and the hazard that they pose, that crypto assets and decentralized concern (defi) person the imaginable to airs existent risks to fiscal stability.

“This would beryllium peculiarly the lawsuit if the accelerated maturation of crypto-asset markets and services proceed … and the interconnectedness with some the accepted fiscal assemblage and the broader system is intensified,” the ECB main added.

However, she noted: “For the moment, the links betwixt the backstage assemblage crypto assets and accepted concern stay inactive constricted — for the moment.”

Lagarde proceeded to speech astir the Markets successful Crypto Assets Regulation (MiCA) bill. She emphasized that the European Systemic Risk Board (ESRB), which she chairs, “supports the request for speedy adoption and implementation” of MiCA.

The ECB main noted that she is encouraged by the advancement of MiCA. However, she added that to her understanding, it “will not beryllium implemented until 2024,” which she stressed “is a agelong mode away.”

Lagarde past suggested immoderate further provisions to the existent MiCA bill. Referring to the MiCA measure with add-on provisions arsenic MiCA2, she explained that MiCA2 “Should code the hazard of interconnectedness with respect to fiscal institutions’ vulnerability to crypto assets.”

It should besides “fully screen decentralized concern (defi)” and modulate crypto staking and lending activities, she said. The ECB brag noted that the existent MiCA measure does not screen bitcoin but she hopes it volition beryllium covered successful MiCA2.

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