During her appearance before the European Parliament on June 21 one week after cryptocurrency lender Celsius suspended all withdrawals, Christine Lagarde, president of the European Central Bank, became the first person to expressly demand greater oversight of the practice. Lagarde stated that a possible second, follow-up framework was already required due to the rapid pace at which current advances in the sector are taking place. She was referring to the Markets in Crypto-Assets (MiCA) law, which is scheduled to go into force throughout the EU by 2024. Lagarde warned:
ECB believes DeFI poses a risk for financial stability
It’s worth mentioning that Lagarde believes that decentralized finance (DeFi), which has the potential to pose a “real risk to financial stability,” should be fully covered in a second regulatory framework in addition to financial intermediaries. In this manner, the most prominent cryptocurrency in the world, Bitcoin, which does not have a single definable issuer, would fall under this framework in the future too. Notably last month the European Central Bank head slammed crypto assets saying they are ‘worth nothing’ and are ‘highly speculative.’
