Following the failure of the Bahamas-based exchange FTX.com, Christine Lagarde, president of the European Central Bank (ECB), stated at the Committee on Economic and Monetary Affairs of the European Parliament that regulating cryptocurrencies in the European Union (EU) is a “absolute necessity.”
Legarde cited the Markets in Crypto Assets bill (MiCA), which is now making its way through the European Parliament, as evidence that the EU has already made great progress in adequately regulating the industry.
“At least Europe is ahead of the pack [in terms of regulation],” Lagarde said. “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.”
Legarde cited the short-lived stablecoin project Diem by Meta Platform Inc. as an instance in which the ECB was able to prevent some industry participants from participating in the project; however, she claimed that FTX was different because it was focused on the stability and dependability of the industry. She continued by saying that the ECB must play a part as consumers’ interest in digital assets grows.
While the ECB has been working on building such a project since July 2021, the European Commission said earlier this year that it will propose a bill to implement a euro central bank digital currency (CBDC) in early 2023.
Last Thursday, the Financial Services and Markets Authority of Belgium stated that it did not view Bitcoin, Ether, or other decentralized cryptocurrencies as securities or investment instruments due to the fact that they have no issuer and were developed through computer code rather than a contract between an issuer and investor.
Similar problems are being addressed by regulators around the world; for instance, legislation to classify Bitcoin and Ether as commodities is currently being discussed in the U.S. Congress.