Loss in virtual currency investment
European Central Bank President Christine Lagarde admitted on the 24th that her son had lost money investing in crypto assets. Reuters reported.
This remark was made when Lagarde spoke with students in Frankfurt, Germany, at City Hall.
Lagarde said she had warned her son about cryptocurrencies, but “he brazenly ignored me. That’s his prerogative.” He added that his son “lost about 60% of his investment, although it wasn’t a huge amount.”
When Lagarde spoke with her son again after the incident, he reluctantly admitted that his mother was right.
Lagarde has two sons in their mid-30s, but she did not specify which son she was referring to. Mr. Lagarde said:
As you can see, my evaluation of virtual currency is very low. People have the freedom to invest their money where they want, and they have the freedom to speculate as much as they want. However, they should not participate in transactions or businesses that are restricted by criminal law.
Since virtual currencies are not restricted by criminal law in the EU, it is unclear what Lagarde’s last words were, but it is possible that she was referring to transactions related to money laundering or fraud.
Lagarde has long expressed skepticism about cryptocurrencies, saying last year that crypto exchanges were becoming “accomplices” in circumventing economic sanctions against Russia.
connection: European Central Bank President Lagarde warns against use of virtual currencies to evade sanctions
The EU is proceeding with legal development
Although Lagarde has taken a critical stance against virtual currencies, regulations for virtual currencies are being put in place in the EU. In June, the comprehensive regulatory proposal “Market in Crypto Assets (MiCA)” was officially approved.
It stipulates licensing systems, consumer protection requirements, stablecoin requirements, etc., and most of the regulations are expected to come into effect after January 2025. The period until then will be a preparatory period for European regulatory authorities to create and apply new rules based on MiCA.
During the discussion, the idea of restricting PoW stocks due to power consumption issues was briefly floated, but in the end the idea was to have virtual currency companies disclose their environmental impact, such as power consumption.
At the same time as MiCA, the Anti-Money Laundering Act, which requires customers to verify their identity when transferring funds, was also approved.
connection: EU officially approves comprehensive virtual currency regulation proposal MiCA, to enter into force in stages
What is PoW?
A consensus algorithm that approves and generates new blocks by performing calculations (mining) on computers. Abbreviation for “Proof of Work.” If the approval is successful, you will receive newly issued virtual currency as a reward. Since the amount of calculation is enormous, it requires a high-performance computer and has disadvantages such as consuming a large amount of electricity.
▶️Virtual currency glossary
Lagarde advocates expanding regulations
Ms. Lagarde argued that in the future, there is a need to further expand regulations beyond the scope currently stipulated by MiCA, especially in response to the collapse of virtual currency exchange FTX.
In particular, he says that it is necessary to respond to staking, lending, DeFi, etc.
connection:European Central Bank Governor: “Virtual currency regulations need to be expanded” after FTX collapse