Christine Lagarde, president of the European Central Bank (ECB), said that regulating cryptocurrency in the European Union (EU) is an "absolute necessity" following the collapse of Bahamas-based exchange FTX.com at the Committee on Economic and Monetary Affairs of the European Parliament on Monday.
See related article: How Europe's MiCA can pave the way for crypto's revival
Legarde said the EU has already made significant strides toward effectively regulating the space, referring to the Markets in Crypto Assets bill (MiCA), which is currently making its way through the European Parliament.
"At least Europe is ahead of the pack [in terms of regulation]," Lagarde said. "But as I said previously, it's one step in the right direction. This is not it - there will have to be a MiCA II, which embraces broader what it aims to regulate and to supervise, and that is very much needed."
Legarde cited Meta Platform Inc.'s short-lived stablecoin project Diem as an example of when the ECB was able to stop some industry players from becoming involved in the project; however, she said that FTX was different as it was about the stability and reliability of the industry. She added that the ECB has a role to play as consumers increasingly show an interest in digital assets.
The European Commission announced earlier this year it will propose a bill in early 2023 to introduce a euro central bank digital currency (CBDC), while the ECB has been working on developing such a project since July 2021.
Belgium's Financial Services and Markets Authority last Thursday said it does not consider Bitcoin, Ether or other decentralized cryptocurrencies to be securities or investment instruments, as they have no issuer and were created by computer code rather than an agreement between an issuer and investor.
Regulators around the world are grappling with similar issues; there is currently legislation being discussed in the U.S. Congress that seeks to establish Bitcoin and Ether as commodities, for example.
See related article: EU Council approves MiCA text for crypto regulation