A week after Celsius, the largest U.S. crypto lending platform, was forced to freeze the withdrawal of funds for its users, European Central Bank (ECB) President Christine Lagarde expressed her conviction that this part of the crypto market needs to be more closely monitored.

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During a speech before the European Parliament on Monday, June 20, Christine Lagarde expressed her thoughts are not only on the looming inflation in Europe and around the world, but also on the growing activity in the placement and lending of crypto-assets. According to Lagarde, this trend requires additional regulatory efforts from the European Union (EU). Referring to the main regulatory package running through the legislative routine, Crypto Asset Markets (MiCa), she even coined the term “MiCa II”:

“MiCA II should regulate crypto asset placement and lending activity, which is definitely on the rise.”

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Lagarde warned of the risks associated with the lack of regulation in this market segment:

“Innovation in these uncharted and uncharted territories exposes consumers to risk, where the lack of regulation is often associated with fraud, completely illegal valuation claims, and very often speculation, as well as criminal transactions.”

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The official specifically mentioned decentralized finance (DeFi), which, in her opinion, also poses a “real risk to financial stability” and, therefore, should be covered by a separate regulatory framework.

The procedure, which has caught the attention of the head of the ECB, is available through the Proof-of-Stake (PoS) protocol and allows multiple crypto token holders to pool their tokens, thereby granting the staking pool operator the status of a validator and rewarding all interested parties with tokens. for their contribution to computing resources.

Pros and cons of staking cryptocurrency

Lagarde is known for her outspoken anti-crypto stance and her numerous claims that cryptocurrencies are “worthless” and “based on nothing.” Meanwhile, the European Commission has announced that it is preparing a proposal for a digital euro for 2023. The ECB is expected to have a prototype by the end of 2023 and if all goes well it could be released in 2025.