Ireland’s central bank has taken a cautious stance on cryptocurrencies, with Governor Gabriel Makhlouf warning of the risks posed by unbacked digital currencies. In a recent blog post, the central bank outlined steps it is taking to protect consumers in the face of growing interest in the crypto space.
While the bank acknowledged the potential of backed crypto, including Electronic Money Tokens (EMTs) and Asset Reference Tokens (ARTs), Makhlouf blasted Bitcoin as a “Ponzi scheme” rather than an investment.
Despite Ireland’s low exposure to the crypto sector, the central bank is taking a careful approach to its regulation, with Makhlouf likening the purchase of unbacked cryptocurrencies to buying a lottery ticket.
He emphasized the need for appropriate reserves and controls to be in place when it comes to backed crypto solutions. The central bank applauded the recently approved Markets in Crypto Assets Regulation (MiCA), the EU’s most comprehensive crypto regulatory framework, which it believes is an important step in the regulation of crypto activities.
Makhlouf concluded that the crypto market must be regulated like other financial markets, with certain rules imposed on the treatment of user funds, disclosures, risk management, governance, and information exchange.
While some governments have been very crypto-friendly, the same cannot be said for Ireland and its central bank. As the crypto space continues to grow, global regulators, including central banks, are seeking to regulate their use. The central bank’s cautious approach reflects a growing concern among regulators about the risks posed by unregulated cryptocurrencies.
