I hope you are all well and having an excellent week, welcome to CryptoGod-1’s blog on all things crypto. I have a story today regarding Ireland and the opinion of its Central Bank regarding crypto.
Irish Central Bank on Crypto
Currently the Irish Central Bank is headed by the Governor Gabriel Makhlouf. He is a British policymaker who has previously served as Secretary to the New Zealand Treasury and Private Secretary to then British Chancellor of the Exchequer, Gordon Brown. He has held his current role since September 2019 and has recently made some comments regarding his views on cryptocurrencies.
Writing in a blog on the Central Bank of Ireland website on Friday the 5th of May 2023, Makhlouf described cryptocurrency as closer to a Ponzi Scheme than an actual investment, stating that making use of the world 'investment' when talking about crypto is "an abuse of the world." He was quick to point out that crypto is not going anyway anytime soon, but also wanted to make clear the Central Bank differentiates between 'backed' and 'unbacked' crypto.
While they are open to the idea of 'backed crypto' they feel the benefits of 'unbacked crypto' should be treated with scepticism and are not things people should seriously consider investing in. According to Makhlouf things such as Electronic Money Tokens (EMTs) and Asset Reference Tokens (ARTs) are what consumers should be focusing on, especially in consideration of the new Markets in Crypto Assets Regulation (MiCA) within Europe.
He also added that the Central Bank discourages the marketing of crypto to the public, especially in the aggressive advertising manner which many influencers go about while not disclosing what they are being paid to do the promotion. Investing in these schemes, according to Makhlouf, is akin to buying a lottery ticket - while there is a possibility of a win, it is unlikely.
Looking at the crypto winter of 2022, he continued to state:
"Firms operate without regulatory oversight and it is clear that some of them chose to operate with little thought for consumers or investors. What began as the crypto winter in 2022 still reverberates."
Makhlouf then went on to add that because of the spate of the events of 2021 and 2022. the very failures such as Terra/Luna and FTX, have ensured that regulators, policymakers, and central banks all focus on discussing crypto and its role in the financial system.
While a lot of those issues came about from misuse of users funds and assets, or indeed through false advertising and breaches of contract, he also believes the central banks are 'taking a real step forward' in terms of making use of the underlying technologies associated with crypto, i.e. the blockchains. Examples he gave included the Bank of International Settlements (BIS) Innovation Hub Eurosystem Centre, where they are known to work on projects which are compliant in the use of decentralised finance (DeFi), along with blockchain and smart contracts.
While Makhlouf notes the importance of regulating and understanding these technologies, he goes on to add that the Central Bank of Ireland is aware of the "moment of significant technological transformation" the world has entered, and that they have a strong focus on technological innovation. Looking towards international co-ordination for regulation and supervision is required at a level commensurate to the risk it poses, according to Makhlouf, while also adding that the cryptocurrency market should be treated the same as other financial markets, with rules on client funds treatment, disclosures, governance, risk management, and information exchange.
The liklihood of these words means little, at least in terms of crypto at large. Ireland is part of the European Union and will therefore be following the MiCA regulations which were recently signed into law, but it is interesting to see the opinions of the Central Bank. My take would be quite simple, they are not looking to 'regulate for the greater good' but instead looking to regulate for further power and control, while removing any decentralised features which would hinder their governance over society. Typical Irish, and typical government and regulatory view on crypto. That is how it generally goes when dealing with those involved with the state. Typical Irish, typical government, and typical and regulatory view on crypto.
Have a great day.
CryptoGod-1.
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