Bitcoin and cryptocurrencies have exploded in value over the past year, making the combined crypto market a staggering $ 2.1 trillion.
The price of bitcoin, peaking at nearly $ 65,000 per bitcoin in April after a meteoric six-month rally, has stood at around $ 50,000 so far. Meanwhile, the price of ethereum has risen further, raising the price of many of its newer rivals.
Now, amid renewed interest in small cryptocurrencies such as cardano, Binance’s BNB, Ripple’s XRP, solana, and dogecoin, European Central Bank (ECB) President Christine Lagarde warned that cryptocurrencies are not currencies and should be treated as “highly speculative” and “suspicious.”
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“I think we need to distinguish between cryptos that are very speculative, occasionally suspect, and high intensity in terms of energy consuming assets, but they are not a currency,” Lagarde said, speaking on a Bloomberg Podcast. “Cryptos are not currencies, period. Cryptos are highly speculative assets that may claim their fame as a currency, but they are not. They are not.”
Along with the huge rally in bitcoin, ethereum, cardano, Binance’s BNB, Ripple’s XRP, solana and dogecoin all made triple-digit percentage gains last year, with investors betting that digital tokens will continue to rise. value as adoption increases. Bitcoin, by far the most valuable cryptocurrency, is now used as both a currency and a store of value, with El Salvador having recently made bitcoin its official currency alongside the US dollar.
However, Lagarde went on to praise stablecoins – cryptocurrencies such as fasteners tied to traditional currencies or real-world assets – and central bank digital currencies (CBDCs).
“You have these stablecoins that are starting to proliferate, that some big techs are trying to promote and push along the way, that are a different animal and need to be regulated, where there has to be oversight that matches the business that ‘they’ actually run, whatever their name, ”Lagarde said.
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Governments and central banks around the world, especially in the United States and China, are beginning to experiment with CBDCs. Under Lagarde, the ECB launched a digital euro project this year, designed as a response to private sector digital currencies such as bitcoin and the stablecoin diem offered by Facebook.
“And in all of this you have the central banks being prompted by customer demand to produce something that will make the central bank and digital currencies fit for the century we find ourselves in, which is why we don’t all look the CBDCs, “said Lagarde, adding:” I wanted to put the issue, the issue of the CBDC, on our agenda because I think we need to prepare for it. “
In 2019, Lagarde warned that cryptocurrencies are “shaking the system”, warning that too many shakes could cost “the necessary stability.”