During a hearing this Monday in Brussels, Christine Lagarde spoke of her desire to move to new rules on cryptocurrency called Mica II.
Christine Lagarde, President of the European Central Bank (ECB), held a second hearing in the European Parliament in Brussels on Monday before members of the Committee on Economic and Monetary Affairs (Econ).
There are currently two texts aimed at regulating the regulation of cryptocurrencies (Mica for “Crypto asset markets are currently under discussion) as well as TFR (to regulate the transfer of funds).
During the hearing, MEP Aurora Lalac asked Christine Lagarde about the impact of cryptocurrencies on financial stability, as well as the links “between regulated and unregulated finance.”
“Crypto assets and decentralized finance could pose a real risk to financial stability given the rapid growth of services and crypto assets,” Christine Lagarde said during the hearing. “Currently, the links between cryptocurrencies and traditional finance remain very limited. The European Systemic Risk Board wants to speed up the regulation of cryptocurrencies, known to all as Mica,” the latter added, calling it Mica I.
Mica I is expected to be launched no earlier than 2024. “It’s a long way off when you think about the speed with which market values are evolving. We wanted to go in the direction of those who want to regulate these assets, “said Christine Lagarde.
“What about the Mica II?”
So the latter asks this question “what about Mica II?” Thanking MEPs for their work on Mica I, the President of the ECB believes that Mica I has a “too narrow” definition of cryptocurrency regulation, calling for a new regulation called Mica II.
What would this rule consist of? Christine Lagarde first refers to the risks of relationships with financial institutions and their impact on cryptocurrencies.
“Mica II should regulate the activities of cryptocurrencies that provide loans. There is also the issue of decentralized financing, which focuses on financial intermediaries, and where there is no such financial intermediary, the law does not apply, this applies to bitcoins that will not be covered by Mica I. We hope that Mica II will take this into account. Mica II should regulate cryptocurrencies when there are no identified issuers, this applies to bitcoin, “said Christine Lagarde.
For the ECB’s president, Mica II would have “a wider space” to regulate “this unexplored territory that threatens consumers.”
Last month, Christine Lagarde explained that cryptocurrencies are not worth it in the Netherlands. At the same time, the institution published a very critical note on the industry.
“The nature and size of cryptocurrency markets are changing rapidly, and if current trends continue, cryptocurrencies will pose risks to financial stability. the ECB considers.
The institution said it was very critical of two areas: platforms that allow investors to achieve record leverage, and those that offer loans in decentralized financing.