The drumbeat of regulation is growing louder for Bitcoin.
European Central Bank President Christine Lagarde has called for a global crackdown on the world’s biggest cryptocurrency—and said existing loopholes need to be closed.
With the crypto markets surging in recent weeks, this serves as further evidence that central banks are scrutinizing BTC like never before.
Speaking at the virtual Reuters Next conference on Jan. 13, Lagarde said:
“[Bitcoin] is a highly speculative asset, which has conducted some funny business and some interesting and totally reprehensible money laundering activity.”
Acknowledging the incredibly fragmented approach to crypto regulation, she added: “There has to be regulation. This has to be applied and agreed upon…at a global level because if there is an escape that escape will be used.”
After the horse has bolted?
Bitcoin has now been around for the best part of 12 years, but regulatory bodies and central banks have been slow to adapt to this cryptocurrency’s rising popularity. That only changed after the introduction of Facebook’s Libra—now Diem—stablecoin project.
On Jan. 11, The U.K.’s Financial Conduct Authority reissued a warning in which it stressed that people who invest in crypto should be prepared to lose all their money.
Back in September, the EU said it will take four years to put regulations in place governing payments made using cryptocurrencies and stablecoins within the trading bloc.
Lagarde’s keenness to clamp down on Bitcoin also comes as the EU explores whether to launch its own central bank digital currency. The continent has been rather slow to embrace this technology, as China is now adding the finishing touches to the digital yuan. There are some eager to bring a digital euro, however, most notably France.
What remains unclear is how Lagarde envisages bitcoin being regulated, and whether the onus will continue to fall on exchanges that are already under pressure to verify the identities of those who use their platforms.
It’s also worth noting that Lagarde has made similar calls before. During her time as chair of the International Monetary Fund, she called on central banks to “fight fire with fire”—and to make a concerted push to embrace the technology that underpins Bitcoin so the cryptocurrency is no longer needed.
Back in March 2018, she wrote: “To be truly effective, all these efforts require close international cooperation. Since cryptoassets know no borders, the framework to regulate them must be global as well.”