ECB President condemns stablecoins
It had been several weeks since we had heard from Christine Lagarde about cryptocurrencies and we were starting to worry a little. We are reassured after the new charge of the President of the ECB.
This time around, she went after stablecoins alone. Indeed, during an interview with the founder and executive director of the World Economic Forum (curious can take a look from 25’00 ”), also known as the Davos Forum, Christine Lagarde said that cryptocurrencies whose value is backed by fiat currency were not currencies, but assets.
Lagarde criticized in particular the fact that stablecoins claim to be currencies when their main selling point is precisely to be guaranteed by a fiat currency in circulation, in this case the US dollar for 95% of them.
👉 To read – Christine Lagarde tackles Bitcoin (BTC) and cryptocurrencies once again
Christine Lagarde, a sharp criticism of cryptocurrencies
Not so long ago, Christine Lagarde was rather positive about digital assets. Its position quickly evolved in 2020, when the price of Bitcoin (BTC) and other cryptocurrencies began to climb to today’s highs.
Last January, the president of the European banking institution called for global regulations to regulate BTC, an asset that would facilitate “funny business”.
Today, it is the stablecoins that worries Christine Lagarde. She considers that they falsely use the name of money when they would in fact be assets to be regulated like assets.
Referring to Tether’s (USDT) recent setbacks with US justice, Christine Lagarde felt that the entities behind stablecoins could not always prove that they are indeed guaranteed. However, it is true that if, for example, the USDT does not have the collateral it claims, it is not as liquid as it should be.
Lagarde thus criticizes the lack of transparency of these crypto-assets that can be used for transactions, given that they are inherently non-volatile.
However, in addition to a desire for permanent criticism of cryptocurrencies, this new release could have an implicit promotional objective for the ECB and the European Union.
Does Lagarde’s criticism of stablecoins have anything to do with the digital euro?
During this interview, Christine Lagarde undoubtedly attempted a product placement in favor of the entity she heads. Indeed, last July, the ECB gave the green light to the digital euro project with an investigation phase to last two years. The president of the institution therefore held a more positive discourse on digital currency in the broad sense.
Christine Lagarde admits that if consumers prefer to use digital currencies instead of coins and banknotes, they must be given the opportunity to do so. However, the digital euro would be the appropriate response to this wish of residents of the euro zone and stablecoins would not be since they are not issued by the ECB.
The attack on stablecoins is also in line with the draft MiCa regulation, future European regulation on digital assets, which devotes an entire chapter to this particular type of cryptocurrency. Strengthened control of the USDT and soon its euro-backed cousins could therefore ultimately serve the ECB’s digital future.
👉 To read – MiCa: the draft of a European regulation for crypto-assets
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About the author: Benjamin Allouch
Formerly a lawyer specializing in personal data and digital law, I quickly became interested in Bitcoin, blockchain technology and their legal implications. I am now an independent consultant and writer in the field of cryptocurrencies and blockchain.
All articles by Benjamin Allouch.