Gabriel Makhlouf, the Governor of the Central Bank of Ireland, has compared ‘unbacked’ cryptocurrencies to ponzi schemes.
According to Finextra, Makhlouf said that while the Central Bank of Ireland is open to the potential of ‘backed crypto’ such as Electronic Money Tokens, unbacked crypto is a massively different proposition.
He said, “My view is that the claimed benefits of ‘unbacked crypto’ should be treated with a large dose of scepticism. The purchase of such products can be similar to purchasing a lottery ticket – you might win but you probably won’t. Describing it as ‘investment’ is, needless to say, an abuse of the word – Ponzi schemes might be more accurate.”
The Governor welcomed the Markets in Crypto-Assets (MiCA) crypto licensing regulations, which has recently been voted through the European Parliament, and described them as an ‘important step’.
He continued, “The reality of course is that crypto is not going away very soon and the nature of the product means international co-ordination is needed to ensure it is regulated and supervised at a level commensurate to the risk it poses.
“The crypto market should be treated no differently to other financial markets with similar rules on the treatment of client funds, and on disclosures, governance, risk management and information exchange.”
Keep up with all the latest FinTech news here.
Copyright © 2023 FinTech Global