The value of bitcoin and cryptocurrencies has exploded over the past year, bringing the combined cryptocurrency market to a value of $2.1 trillion.
Bitcoin price, which peaked at nearly $65,000 per bitcoin in April after a sharp six-month rally, is stable at around $50,000 — for now. Meanwhile, the price of Ethereum rose even more, boosting the price of many of its new competitors.
Now, amid rising interest in smaller cryptocurrencies such as cardano, Binance’s BNB, Ripple’s XRP, solana and dogecoin, European Central Bank (ECB) President Christine Lagarde has warned that cryptocurrencies are not currencies and should be treated as “highly speculative” and “suspicious”. .”
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said Lagarde, speaking of Bloomberg Audio notation. “Cryptocurrencies are not currencies, they are a highly speculative asset that claims to be a currency, perhaps, but it is not. It is not.”
Besides bitcoin’s massive rally, Ethereum, Cardano, Binance’s BNB, Ripple’s XRP, solana, and dogecoin all posted triple-digit gains in the past year as investors bet the digital tokens will continue to rise in value amid growing adoption. Bitcoin, the most valuable cryptocurrency by a large margin, is now being used as both a currency and a store of value, with El Salvador recently making Bitcoin its official currency alongside the US dollar.
However, Lagarde continued to praise stablecoins — cryptocurrencies like tethers tied to traditional currencies or real-world assets — and central bank digital currencies (CBDCs).
“You have those stablecoins that are starting to spread, that some big tech companies are trying to promote and go their way, and they are different animals and they need to be regulated, where there has to be oversight that goes with the work they do,” Lagarde said. Indeed, no matter how they call themselves.”
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Governments and central banks around the world, most importantly in the United States and China, are beginning to experiment with digital central bank currencies. Under Lagarde, the European Central Bank this year launched a Digital Euro project, designed as a response to private sector digital currencies such as Bitcoin and Facebook’s proposed stablecoin.
“In all of that you have central banks driven by customer demand to produce something that makes central bank and central bank digital currencies relevant for the century we are in,” Lagarde said, adding, “I was keen on that. To push this issue, the issue of CBD, on our agenda. Because I think we have to be prepared for that.”
Back in 2019, Lagarde warned that cryptocurrencies were “shaking the system” — warning that too much shake-up could cost the “needed stability.”