Lagarde Calls for Crypto Crackdown, Says They’re ‘Based on Nothing’

Lagarde Calls for Crypto Crackdown, Says They’re ‘Based on Nothing’
Christine Lagarde, head of the European Central Bank (ECB), speaks at a press conference in Frankfurt, Germany, on Oct. 28, 2021. (Thomas Lohnes/Getty Images)
Tom Ozimek

European Central Bank President Christine Lagarde has taken aim at cryptocurrencies, arguing in an interview on Dutch television that they’re essentially “worth nothing” as they lack underlying assets “as an anchor to safety” while calling for them to be regulated.

Lagarde made the remarks in an interview on the Dutch television program “College Tour,” due to be released on May 22, according to Politico.

“I have said all along the crypto assets are highly speculative, very risky assets,” Lagarde told the program. “My very humble assessment is that it is worth nothing. It is based on nothing, there is no underlying assets to act as an anchor of safety.”

She added that she’s worried about people speculating on cryptocurrencies with their life savings as they may not be aware of the risks.

Lagarde said she’s concerned about those “who have no understanding of the risks, who will lose it all and who will be terribly disappointed, which is why I believe that that should be regulated,” as per Bloomberg.

In January, Lagarde called for global regulation of Bitcoin, telling Reuters in an interview at the time that the digital currency had been used for money laundering and arguing for rules that would close related loopholes.

Bitcoin “is a highly speculative asset, which has conducted some funny business and some interesting and totally reprehensible money laundering activity,” Lagarde told the outlet in an interview at the Reuters Next conference.

While Lagarde did not elaborate on money laundering specifics related to cryptocurrencies, she argued for regulation that would be agreed upon and applied at a global level “because if there is an escape, that escape will be used,” referring to regulatory loopholes.

Her remarks come amid recent turmoil in crypto markets, which have shed over $1 trillion in value over the past six months.

Other crypto woes include the collapse in value of the TerraUSD (UST) stablecoin, which was supposed to be pegged 1–1 to the U.S. dollar but which has fallen to around six cents as of May 21, according to CoinMarketCap.

The spectacular UST plunge prompted Securities and Exchange Commission Chairman Gary Gensler to say earlier in the week that he, like Lagarde, worries that investors will be hurt in crypto markets.

“I think a lot of these tokens will fail,” Gensler told reporters after a House Appropriations Committee panel hearing on May 18. “I fear that in crypto … there’s going to be a lot of people hurt, and that will undermine some of the confidence in markets and trust in markets writ large.”

Besides regulators and other officials ramping up their crypto criticism, other prominent individuals have expressed reservations about the asset class.

Microsoft co-founder Bill Gates said during a Reddit Ask Me Anything session on May 19 that he hasn’t invested in crypto because it isn’t “adding to society.”

“I don’t own any,” Gates wrote. “I like investing in things that have valuable output. The value of companies is based on how they make great products. The value of crypto is just what some other person decides someone else will pay for it so not adding to society like other investments.”

Like Gates, Lagarde, too, doesn’t own any crypto, telling the College Tour program that she wants to “practice what I preach.”

Other ECB officials have made critical remarks with regard to cryptocurrencies and, like Lagarde, have called for them to be regulated.