In case you were thinking of investing in them… Cryptocurrencies are worth nothing, says Lagarde – El Financiero

A dramatic increase in the size and complexity of crypto markets means that the sector is on the way to becoming a risk to financial stability that urgently needs to be regulatedsaid the European Central Bank (ECB).

Although, the volatility recent has not been contagious for the rest of the world financial systemthe threat is growing with the growing involvement of institutional investors, the ECB said in a previously published chapter of its financial stability review.

“According to the developments observed to date, the markets for crypto assets currently show all the signs of an emerging risk to financial stability”, the central bank said. “As this is a global market and therefore a global problem, global coordination of regulatory measures is necessary.”

The ECB has intensified warnings and calls for stricter regulation in recent days since the TerraUSD stablecoin crashed from its expected parity with the dollar earlier this month.

The president Christine Lagarde said last week that, in his opinion, cryptocurrencies “worth nothing”and the member of the Governing Council, Francois Villeroy de Galhau, joined the skepticism on Monday saying that the promises of cryptocurrency rewards were “an illusion”.

In an interview with Bloomberg Television’s Francine Lacqua on Tuesday from Davos, Lagarde reiterated that sentiment.

“All I know is that it’s been up and down and it’s a highly speculative asset as I’ve said all along,” he said. “Some are experiencing this right now.”

doubtful diversification

In its review, the central bank also said that the growing correlation between cryptocurrencies and more conventional risk assetswhich “casts doubt on its usefulness for portfolio diversification”.

Trading assets like Bitcoin, Ether and Tether it has at times outperformed volumes on the New York Stock Exchange, the central bank said. And despite recent declines, crypto markets remain similar in size to those in subprime mortgages, which triggered the 2008 global financial crisis.

The ECB urged the European Union to approve its regulation known as MiCA “as a matter of urgency” and to take further measures to mitigate the risks to financial stability.

“Any additional steps that allow the traditional financial sector to increase its interconnection with the crypto-asset market space must be carefully weighed,” the ECB said.

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