A week after major US crypto lending platform Celsius was forced to freeze withdrawal options for its users, European Central Bank President Christine Lagarde expressed her conviction that scrutiny should be tightened in this segment of the cryptocurrency market.
During her testimony before the European Parliament on Monday, Lagarde expressed her thoughts not only on looming inflation in Europe and around the world, but also on the increased activities of crypto-asset lending and acquisitions. In Lagarde’s opinion, this trend requires additional regulatory efforts from the European Union. Referring to the major regulatory package making its way through legislative red tape, Markets in Crypto Assets (MiCA), it even coined the term “MiCA II”:
“MiCA II should regulate crypto-asset borrowing and lending, which is definitely increasing.”
Lagarde warned of the risks posed by a lack of regulation in this market segment:
“Innovations in these unexplored and unknown areas put consumers at risk, as lack of regulation often covers fraud and completely wrongful allegations about valuation, often speculative as well as criminal transactions.”
The official separately referred to decentralized finance (DeFi), which, in her view, also poses a “real risk to financial stability” and therefore must be covered by the separate regulatory framework.
An action that attracts the attention of the ECB President, which is available on the Proof of Stake (PoS) protocol and allows multiple crypto holders to pool their tokens, thus granting the staking pool operator validation status and rewarding all token stakeholders for contributions of their computational resources.
Related: Pros and Cons of Staking Cryptocurrency
Lagarde is known for its public anti-crypto stance and the many claims that cryptocurrencies are “worth nothing” and are “based on nothing.” Meanwhile, the European Commission has announced that it is preparing a digital euro proposal for 2023. The European Central Bank is expected to have a prototype by the end of 2023, and if all goes well, it could be released in 2025.