European Central Bank Chief: Crypto Assets ‘Worth Nothing’

With crypto markets coming to grips with potentially another Crypto Winter, many of the industry’s long-standing critics have taken the opportunity to add fuel to the fire.

Now, you can add the president of the European Central Bank to the list.

Appearing on the Dutch program “College Tour” last night, ECB chief Christine Lagarde stated flatly her belief that recent events have proven crypto assets to be worthless: “My very humble assessment is that it [crypto] is worth nothing. It’s based on nothing. There is no underlying asset to act as an anchor of safety.”

To her, the market’s recent crash came as no surprise, adding, “I’ve said all along that crypto assets are highly speculative, highly risky assets.”

Lagarde argued before an audience of college students that too many young people invest in cryptocurrencies expecting consistent returns, only to fall victim to the market’s volatility. 

She said that crypto investments should only be made “by people who have their eyes wide open about the fact that they can lose it all. I mean, it’s gone down by 20% last week.”

Polling the audience, Lagarde heard from one college student who lost €7,000 (~$7,470) worth of Cardano last week. “That hurts,” she sighed. 

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Still, the ECB chief isn’t interested in an outright ban on crypto trading in the European Union.

The answer to the problem, in her mind, is regulation. “If you want to invest there, it’s your choice,” she stated. But, “I believe that should be regulated…. Those who invest should know. It’s a super risky asset.”

Lagarde, ECB, and central bank digital currencies

Besides polling college students on their crypto losses, the ECB chief also discussed the central bank’s central bank digital currency (CBDC) plans.

In February, the European Union announced it would consider legislation to create a digital euro by early 2023. Lagarde has previously stated that the process of actually creating an EU central bank digital currency (CBDC), backed and issued by the European Central Bank, could take up to four years.

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“The day when we have the Central Bank digital currency out–any digital euro–I will guarantee it,” Lagarde told the audience last night. “So the Central Bank will be behind it. And I think that’s vastly different from any of those things [crypto].” 

When the ECB polled EU citizens about a digital euro last year, the majority of respondents said they would like the currency to run on a blockchain. 

A majority also stated privacy to be a priority in the currency’s construction and desired “a limited or no role for intermediaries” in its operation.