Regulations
Francois Villeroy de Galhau – a member of the European Central Bank and Governor of Banque de France – thinks the diminishing interest in cryptocurrencies due to the market crash does not mean authorities should abandon plans to regulate the industry.
Last year, he argued that imposing rules on the digital asset sector is essential for Europe as otherwise, the euro might lose some of its strength.
In a recent appearance, Francois Villeroy de Galhau reiterated his position that the cryptocurrency industry should function under a comprehensive regulatory regime.
He outlined the current market decline and the fact that numerous investors prefer not to delve into the asset class at the moment. However, he believes this should not be a reason for global regulators to withdraw intentions to impose rules on the space:
“The so-called ‘crypto-winter’ is no reason for complacency or inaction.”
Villeroy went further, claiming an inappropriate regulatory model could harm the financial system, meaning that watchdogs should be extra careful when developing it:
“We should be extremely mindful to avoid adopting diverging or contradictory regulations or regulating too late. To do so would be to create an uneven playing field, risking arbitrage and cherry picking.”
Speaking on the matter was also Christine Lagarde – the President of the European Central Bank. She noted that people’s desire to employ digital payments has increased in the past few years, so the monetary institution should respond to that demand.
Instead of backing up the advancement of bitcoin and the alternative coins, the ECB is predominantly focused on issuing a digital form of the euro. Earlier this month, the bank revealed that Amazon, CaixaBank, Worldline, and other prominent entities will assist in the development of the CBDC prototype.
In July 2021, the head of the French central bank opined Europe should take hasty actions to regulate the digital asset realm, or the international role of the euro would be in danger:
“Whether it is digital currencies or payments, we in Europe must be ready to act as quickly as necessary, or take the risk of an erosion of our monetary sovereignty.”
Interestingly, in 2020, he argued that stablecoins and CBDCs could also pose risks to the financial system, and watchdogs should put them under their scope.
