Key Takeaways
- ECB president Christine Largade criticizes stablecoins
- Lagarde claims that many stablecoin issuers cannot fully guarantee their underlying assets
- The ECB chief admits that EU citizens have the right to spend digital assets and proposes the digital euro as an alternative
Lagarde is known for her constant criticism of cryptocurrencies, and this time stablecoins are the subject of her complaint.
The ECB chief made her opinions known in an interview with the World Economic Forum.
Lagarde criticized the fact that stablecoins claim to be currencies when their main selling point is that they are pegged to a fiat currency in circulation.
Currently, more than 95% of stablecoins are pegged to US dollars.
Referring to Tether's (USDT) recent setbacks with the US justice department, Lagarde feels that entities behind stablecoins could not always prove that the underlying commodity fully backs their assets.
Tether agreed on a settlement fee with the US Attorney General's office following accusations of falsifying the degree to which the US dollar-backed USDT.
This development has caused several financial regulators to look closely into stablecoins and their stability mechanisms.
Lagarde promoted the digital euro project that is currently under development.
She admits that if consumers preferred to use digital currencies instead of coins and banknotes, they must be given the opportunity.
However, Lagarde added that the digital euro would be the appropriate response to residents' wishes in the eurozone, and stablecoins do not fit the mold since the ECB does not issue them.
The attack on stablecoins is also in line with the MiCa draft regulation, the future European regulation on digital assets, which devotes an entire chapter on stablecoins.
However, it remains to be seen how the ECB intends to fully regulate the stablecoin sector as new coins spring up daily.
Do you agree with Lagarde’s opinion on stablecoins?
