Verena Ross, the chair of the European Securities and Markets Authority, believes the current economic condition might act as a catalyst for increased investments in Bitcoin. She says the EU needs to be ready from a regulatory perspective with the possibility of increased uptake of Bitcoin.
Ross says the high returns promised by cryptocurrencies make assets like Bitcoin look very attractive. However, with rising inflation, investors will look for investments that would compensate for inflation and bring greater returns. This might lead to greater risk-taking. As such, the European Securities and Markets Authority is monitoring the situation.
The chair urged for a unified European approach to crypto regulations as an improvement from the current framework that depends on national laws. Ross highlighted the imbalance among regulators. Her warning comes as the European Central Bank is looking to raise interest rates to tackle the rising inflation. The ECB is also pushing for crypto regulations and this has intensified amid Terra’s stablecoin UST collapse.
Christine Lagarde, the ECB’s president, reiterated her position on cryptocurrencies. She expressed concern about people who have no understanding of the risks. The crypto market is facing scrutiny from regulators who are worried about the dangers it poses to the broader financial system. Furthermore, crypto has proved to be very risky amid rising inflation. But enthusiasts still regard it as a formidable hedge.