ECB president says cryptocurrencies have zero value. What is the reason for the claim?
While Bitcoin is on the verge of a new “crypto-zima”, critics of the cryptocurrency are getting harsher and harsher. The president of the European Central Bank (ECB), Christine Lagarde, is also in their camp. In a recent broadcast of the Dutch TV show College Tour, Lagarde explicitly stated that she believes the recent developments in the crypto market are clear proof that crypto-assets have no value. Here’s more on what’s going on.
It is worth noting that not all bank representatives continue to criticise digital assets. In particular, Goldman Sachs experts commented on the coin niche the day before. According to their analysis, the prospect of crypto market collapse will not affect the global economy. Read more about the analysts’ views in a separate article.
Why Bitcoin is being criticised
It turns out that for Lagarde herself, the recent collapse of the crypto market came as no surprise. Here’s one of her quotes on the matter, published by the news outlet Decrypt.
My very humble assessment is that cryptocurrencies are worthless. They are not based on anything. There is no underlying asset that serves as an anchor of security. I have said all along that crypto-assets are highly speculative, high-risk investments.
It is important to note right away here that conventional fiat money is just as unsecured, that is, it is printed solely out of thin air. This state of affairs became relevant after the gold standard for the dollar was abandoned, as a result of which its value also ceased to have anything behind it. However, for some reason Lagarde does not mention this and presents cryptocurrencies exclusively as an unsecured asset.
ECB head Christine Lagarde
Lagarde said that too many young people invest in cryptocurrencies in the hope of a steady income, but they end up falling victim to market volatility, i.e. sharp changes in asset values. In her view, crypto investing should only be available to a limited number of people.
It should only be done by people with their eyes wide open to the fact that they could lose everything. I mean, the crypto market is down 20 per cent in the last week.
The digital asset market has indeed given out a dip, but it is important to remember its ability to grow as well. In particular, even Bitcoin alone has increased in value more than tenfold since the March 2020 collapse amid the spread of the pandemic. Again, the banking system representative also prefers to remain silent about the ability of cryptocurrencies to increase in value.
Nevertheless, the ECB head is not interested in a complete ban on cryptocurrency trading in the European Union. The solution, in her view, is regulation.
If you want to invest in crypto, that is your choice. But I believe the process should be regulated. Those who invest should be aware. These are very risky assets.
Bitcoin exchange rate over the last 30 days
Read also: What it takes for Bitcoin to rise to a million dollars: response from BitMEX co-founder Arthur Hayes
Christine Lagarde herself is true to her principles and does not invest in digital assets. In her words, she only owns what she “openly stands for”. However, one of the ECB chief’s two sons does not share her beliefs. Lagarde also admitted this personally – her son has indeed diversified part of his investment portfolio into crypto. Of course, he can do so, as investing in cryptocurrencies is not officially prohibited by law.
Recall that in January 2021, the president of the ECB said that Bitcoin is a “highly speculative asset” that could be used in criminal activities. It should therefore operate in a highly regulated environment. A month later, she reiterated her view, stating that the major digital asset has no future. Lagarde also believes it is “highly unlikely” that central banks will ever hold cryptocurrencies.
Crypto investors after another market slump and criticism of Bitcoin
The politician touched on the subject again shortly after the geopolitical disaster began in February this year. She called for regulation of the crypto industry, as otherwise Russia could bypass financial sanctions from the EU and US.
European Central Bank
We believe that Christine Lagarde's statements about the lack of value of digital assets solely because they are unsecured are completely irrelevant, as the same applies to fiat money. That said, the crypto industry, through the widespread use of smart contracts, makes it easy for people who do not have access to banks because of their country of residence to connect to the global financial system. Still, all it takes to interact with the decentralised finance industry is a smartphone, an internet connection and a small supply of coins. But then again, Lagarde won't say so - as a possibility due to his lack of in-depth knowledge of the coin niche.
Read even more interesting things in our millionaires cryptochat. Also discuss other news from the world of blockchain.
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