The European Central Bank is working with some leading companies to develop a digital form of the euro. The governor of Banque de France said Europe should regulate crypto assets to avoid risking the strength of its fiat currency.
The authorities should not abandon their plans to regulate crypto assets because of the decline in interest in them. Those were the words of François Villeroy de Galhau, member of the European Central Bank and governor of Banque de France.
In 2021, he said that applying rules to the crypto asset industry is crucial for Europe to prevent the euro from losing its strength.
Villeroy Thinks It Is Time to Regulate the Cryptocurrency Sector
François Villeroy de Galhau recently restated that a complete regulatory regime should control the cryptocurrency industry.
He stressed that the current market decline had led many investors to avoid delving into the crypto asset class. However, that reason should not cause regulators to back down from their intentions to impose rules on the sector.
In other words, Villeroy believes that the crypto market winter is not a sufficient reason for complacency or inaction.
Villeroy also argued that regulators must be cautious, as a wrong regulatory model might damage the financial system. He said they must avoid adopting conflicting or inconsistent regulations or applying them too late. The governor of Banque de France believes this would imply creating an irregular playing field, thus risking arbitration and cherry-picking.
The European Central Bank Works on Developing a Digital Euro
Christine Lagarde, the president of the European Central Bank, noted that people have increasingly used digital payments. The French politician and lawyer said the financial institution should respond to that situation.
The European Central Bank focuses on issuing a digital form of the euro, not on supporting the advancement of Bitcoin (BTC) and altcoins. In early September, the institution announced that leading entities like Amazon, CaixaBank, and Worldline would help develop the CBDC prototype.
Villeroy Also Believes Stablecoins and Central Bank Digital Currencies Are Risky
In July 2021, the governor of Banque de France said that Europe should take crucial measures to regulate crypto assets. He argued that not doing so would put the euro at risk.
Villeroy stated that Europe must be ready to act quickly to avoid risking its financial sovereignty regarding digital currencies or payments.
Two years ago, the French civil servant and banker discussed that even stablecoins and CBDCs might pose risks. Therefore, he highlighted that regulators should oversee them, thus protecting the European financial system.
Cryptocurrencies like Bitcoin are increasingly relevant in the economy worldwide, which regulators know very well. The European Central Bank has always rejected the idea of adopting them as they allegedly contribute to illegal activities.
Meanwhile, Bitcoin is trading at around USD 19,450 and has accumulated a 4.1% gain over the last 24 hours. While its daily trading volume is above USD 46.72 billion, its market capitalization is about USD 372.74 billion, according to CoinGecko.
By Alexander Salazar
