A week following the stop placed by Celsius – the prominent crypto U.S.-based crypto lending venue – on the withdrawals for the consumers thereof, the president of the European Central Bank (ECB) named Christine Lagarde expressed her opinion regarding the requirement of stringent scrutiny targeting this section of crypto industry.
During the verification in front of the European Parliament, Christine Lagarde mentioned her perception not just regarding the mounting inflation within Europe as well as throughout the world but also regarding the growing operations linked to the lending as well as staking of crypto assets. in the viewpoint of Lagarde, this tendency requires extra regulator endeavors to be carried out on the behalf of the European Union (EU).
While she pointed toward the prominent regulatory package, going through the legislative procedure – the Markets in Crypto-Assets (MiCa) – even a new term “MiCa II” was coined by her. In her words, the operations related to the lending as well as the staking of crypto assets (which are growing to a great extent) should be carried out by MiCa II. Lagarde cautioned regarding the hazards of dealing with the deficiency of regulation in this section of the industry.
According to her, due to innovations in such uncharted and unexplored zones, the customers are put at risk as the deficiency in regulation becomes a cause of a spread in frauds, illegal assertions regarding valuation, as well as criminal dealing. The executive moved on to separately discuss the matter of decentralized finance (DeFi). This sector, in her perception, also presents hazards to financial stability and hence a unique regulatory agenda should be developed that would solely be dealing with this field.
Staking is accessible through Proof-of-Stake (PoS) protocol, permitting several holders of crypto tokens to get their tokens pooled in, thereby providing a validator status to the operator of the staking pool along with rewarding tokens to the entirety of the stakeholders for the computational resources-based contributions thereof.
Lagarde is known for her explicit anti-crypto stance as well as numerous assertions that cryptocurrencies are worthless with no intrinsic value of their own. In the meantime, it was declared on the behalf of the European Commission that the agency is getting ready for its digital euro tender for the next year. It is expected that a prototype will be developed by ECB by the upcoming year’s end, and if all goes according to the plan, its issuance may be witnessed in 2025.