Ireland’s Central Bank Labels Bitcoin as a Ponzi Scheme
The cryptocurrency industry is facing issues on various fronts. However, the nascent technology has continued to move forward and make progress regardless of all the obstacles and criticism. Every nation has taken a different stance on the cryptocurrency market under its jurisdiction.
At one end, many nations have retained a friendly stance towards crypto development, such as Switzerland. On the other hand, some regions are still working on crypto regulations.
The latest resistance against the crypto market has arrived from the governor of Ireland Central Bank. The firm published a new blog post citing the aspects of crypto regulations. The post also shared a brief overview of the steps that the Central Bank was taking to ensure the safety of its consumers that are associated with cryptocurrency trading.
It is important to mention that the banking sector of the UK has retained a strict stance towards crypto products. Various UK banks such as HSBC have issued letters and warnings for their clients regarding the volatile nature of cryptocurrencies.
Ireland’s Central Bank Governor Highlights the Advantages and Risks of Crypto Trading
Gabriel Makhlouf is the governor of the Irish Central Bank. He has pointed the attention of investors toward the benefits and risks that are associated with crypto trading. It is worth mentioning that the total crypto adoption rates in the country are already low in comparison to various Western nations.
He maintained that the Central bank has classified crypto between backed and unbacked entities. Many cryptocurrency projects are backed by other assets such as fiat currencies, debt, or other asset classes.
However, many of the crypto projects work on the same principle as fiat, which is basing their value on the goodwill of governance rather than any backed asset reserves.
He has also called Bitcoin a Ponzi scheme. At the same time, the governor agreed with the potential of backed crypto projects. Some of the important utilities of backed digital assets include Electronic Money Tokens and Asset Reference Tokens as per Makhlouf.
On the other hand, he has maintained that unbacked cryptocurrencies need a better approach to management and handling.
Makhlouf has likened cryptocurrencies to lottery tickets where there is a chance to win but it all comes down to luck. It is important to note that just about every investment product comes with a mandatory speculative nature such as commodities, forex, stocks, etc.
However, the traditional banking sector has remained exclusively critical of the cryptocurrency market only. In addition to being critical of crypto markets, the governor applauded the Markets in Crypto Assets Regulations or MiCA as the best crypto regulatory legislature issued by the EU.
He told the media that he looks forward to the new regulations. The law will go into effect at the end of 2024. However, Makhlouf maintained that the regulatory document is going to play an important role in shaping the crypto markets.
He concluded his media brief by maintaining that crypto markets should be regulated just like other financial instruments. Such that crypto should adhere to centralized rules for the treatment of client reserves, risk management, administration, and exchange of client data, etc.