- The Governor of the Central Bank of Ireland has called for policy action against Ponzi schemes in crypto.
- The central bank official believes that unbacked crypto poses risks to investors and consumers.
- The governor lauded recent efforts by the European Union to develop regulations for the crypto sector.
Gabriel Makhlouf, the man at the helm of the Central Bank of Ireland, has voiced his concerns regarding unbacked cryptocurrencies. The governor of the Irish Central Bank believes that such crypto assets expose consumers and investors to heightened risks as compared to traditional investment vehicles.
According to a report from Bloomberg, the central bank official likened unbacked cryptocurrencies to Ponzi schemes rather than an investment. Governor Makhlouf emphasized the need for urgent policy action to address the risks associated with crypto assets. He intends to work with British and European regulators to develop a rigorous regulatory regime for the crypto industry.
“A regulatory regime that appropriately protects consumers and investors, preserves market integrity against fraud, manipulation, and money laundering, and also safeguards financial stability, is an important next step,” Governor Makhlouf stated. He added that regulators need to implement a level playing field across Europe in the interest of consumer protection.
The Central Bank of Ireland has made a clear distinction between backed and unbacked cryptocurrencies. The Governor revealed that the central bank is open to the idea of backed crypto such as Electronic Money Tokens (EMTs) and Asset Reference Tokens (ARTs), as long as the necessary reserves and controls are in place.
As far as unbacked crypto is concerned, the central bank Governor was not too thrilled about them. According to him, investors should exercise caution when interacting with such assets. Makhlouf described it as buying a lottery ticket where losing is a highly likely outcome.
Gabriel Makhlouf lauded the efforts by policymakers in the European Union for their efforts to come up with a comprehensive regulatory framework for the crypto industry and welcomed the recently unveiled Markets in Crypto Assets Regulation (MiCA).
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