Home Finance Christine Lagarde, calls for new regulations on crypto-currencies after FTX collapse

Christine Lagarde, calls for new regulations on crypto-currencies after FTX collapse

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The implosion of FTX and Alameda has stung global regulators, and ECB President Christine Lagarde is now calling for increased oversight of crypto-currencies.

Christine Lagarde calls for regulation of crypto-currencies

Responding to questions from representatives of the European Parliament who are deeply concerned about the crypto-currency market in the wake of the FTX collapse, Christine Lagarde said that the “stability and reliability” of crypto-currencies had been exposed. In addition, more than $450 million was stolen from FTX one night before filing Chapter 11 bankruptcy, which was considered an inside job. As a result, about 1 million crypto traders and investors have been locked out as the legal proceedings drag on.

Notably, the European Union member states officially approved the final text of the Cryptographic Assets Markets Regulation (MiCA) – the EU’s comprehensive framework for regulating the issuance and servicing of most crypto assets – on October 5, 2022. With implementation of the MiCA regulation expected by the end of the year, Lagarde said a MiCA II is needed.

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Furthermore, the crypto-currency market is still in its infancy, with many operational changes expected along the way. As such, a second version of the EU’s regulatory framework to encompass the evolving trends of the crypto-currency market is prudent, according to Lagarde.

The future of the crypto-currency market after the FTX implosion

FTX’s bankruptcy has surprised many investors who fear a possible unexpected collapse of centralized crypto exchanges. According to our latest crypto price oracles, the total capitalization of the crypto market stands at about $870 billion, down more than $2.2 trillion in the past 12 months. While the potential for further decline is likely due to the effects of FTX and Alameda, the crypto market is well positioned for a significant recovery as more regulations take effect.

The European Union is moving to deploy a CBDC with a trusted digital payments infrastructure. “We have to be able to offer that, or someone else will take that spot,” Lagarde said.

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Global regulators are working closely with crypto-currency companies to regulate the entire industry.

Recently, Binance CEO Changpeng Zhao (CZ) noted that a crypto-currency organization that works with regulators is crucial for global adoption.

As a result, there will be more scrutiny of crypto company licenses, especially on centralized exchanges like Coinbase Global and Binance.

Lagarde has been the president of the European Central Bank since 2019 and has significantly shifted the organization towards digital payment services. As such, the crypto-currency market is expected to thrive, but market strategists are predicting a longer winter.

With more than 300 million people reportedly using bitcoin and altcoins for fast and affordable cross-border payments, governments will continue to support the crypto-currency market with the appropriate regulations.