As the cryptocurrency market expands, governments and central banks throughout the world are working to establish guidelines for its usage. While the governments of other countries have been welcoming to crypto, Ireland’s government and central bank have been everything but.
On May 5th, Ireland’s central bank released a blog post detailing the latest developments in crypto legislation and the measures it is taking to safeguard consumers from the hazards presented by the booming sector.
Despite the fact that Ireland’s exposure to the industry is already modest, Gabriel Makhlouf, the bank’s governor, said the central bank will continue to take care when it comes to the benefits and hazards of crypto. Despite deriding Bitcoin (BTC) as a ‘Ponzi scheme‘ rather than an investment, the governor stated the central bank differentiates between ‘backed crypto’ and ‘unbacked crypto.
The bank, however, saw the potential of ‘backed crypto,’ including solutions like Electronic Money Tokens (EMTs) and Asset Reference Tokens (ARTs), under the EU’s new legal framework “where appropriate reserves and controls are in place.”
On the other hand, Makhlouf thinks ‘unbacked crypto’ needs a lot more caution. He compared investing in unsupported cryptocurrencies to gambling, saying, “you might win, but you probably won’t.”
The Bank of Canada has expressed its approval of the Markets in Crypto Assets Regulation (MiCA), the most extensive crypto regulatory framework in the European Union (EU).
“I applaud this change. It’s a crucial step towards regulating crypto activity, even though it won’t be completely implemented in the EU until the beginning of 2025. According to Makhlouf.”
The governor ultimately decided that the crypto market required regulation similar to those of existing financial markets, including laws for the handling of user money, disclosures, risk management, governance, and information sharing.
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