Following the failure of the Bahamas-based exchange FTX, Christine Lagarde, the European Central Bank (ECB) president, stated during the speech at the Committee on Economic and Monetary Affairs of the European Parliament on November 28th that regulating cryptocurrencies in the European Union is an “absolute necessity.”
Responding to questions from policymakers who were concerned about the effects of FTX collapse, Christine responded that the stability and reliability of cryptocurrency had been revealed in an obvious way lately.
Concerning the FTX saga, Christine repeated her earlier call for more significant legislative action around cryptocurrencies – as the Parliament nears passage of the Markets in Crypto Assets bill (MiCA).
Regarding MiCA, which is currently being debated in the European Parliament, she said that the EU has already taken necessary steps toward efficiently regulating the industry.
Ms. Christine Lagarde asserted that enforcing MiCA would make Europe pioneers in this world of great invention and unreliability. However, the bill is expected to pass early next year and go into effect in 2024.
According to her statement:
At least Europe is ahead of the pack [in terms of regulation]. 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.
An Upcoming EU regulatory Package Following FTX Issue
She has been advocating for a second set of rules – known as MiCA II – that would continue to explore the possibilities opened up by the landmark framework, focusing on areas beyond those defined by MiCA, such as how crypto activities tie into traditional finance or decentralized financial operations.
In June, after Celsius, the cryptocurrency lending platform froze the withdrawal option for its users, Christine Lagarde first voiced her belief that stricter oversight is needed over these unregulated and unchecked parts of the digital world.
During her testimony at the European Parliament, Lagarde expressed not just her thoughts about impending inflation in Europe and across the world but also about increased crypto-asset involvement.
She pointed out MiCA II, referring to an upcoming EU regulatory package for markets based on crypto assets:
MiCA II should regulate the activities of crypto-asset staking and lending, which are definitely increasing.