Christine Lagarde Calls For Regulatory Expansion In Crypto Bill After FTX Crisis
European Central Bank (ECB) President Christine Lagarde has called for more regulation of cryptocurrencies following the collapse of the FTX exchange and cast doubt on the broader digital asset market.
At the November 28 hearing of the European Parliament’s Committee on Economic and Monetary Affairs, President Christine Lagarde cited the case against Facebook’s Libra stablecoin project as an example of participation in the crypto market from the ECB, which is a useful action to prevent some major players from having a negative impact on the industry.
However, Christine Lagarde said that the situation of FTX, regarding crypto assets in general as opposed to stablecoins, is more about the stability and reliability of exchanges, and the ECB needs to step up its role as a global regulator to address people’s growing concern about this risk.
In June, Lagarde mentioned MiCA II, which is probably more legislation based on the work parliamentarians performed for the initial measure. The framework, according to the ECB president, should control the activities of crypto-asset staking and lending, which are rising. In the hearing yesterday, Lagarde said:
“At least Europe is ahead of the pack. But as I said previously, it’s one step in the right direction. This is not it, there will have to be a MiCA II, which embraces broader what it aims to regulate and to supervise, and that is very much needed.”
Following legal and linguistic tests by EU parliamentarians, the Markets in Crypto Assets Act, or MiCA, is awaiting final approval. Following trialogue talks between the EU Council, the European Commission, and the European Parliament, the MiCA framework was approved by the European Parliament’s economics committee in October. Many people anticipate that the regulation will go into force in 2024.
However, the ECB is also currently conducting a two-year investigation phase of its digital euro (CBDC) project, exploring the use of online payments authenticated by third parties. Some officials in the EU expect to see legislation regarding a digital euro in 2023.
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