What just happened? Cryptocurrencies are not having the best of times right now. In addition to the crashing prices that saw almost $1 trillion wiped off markets, it seems people are lining up to disparage Bitcoin and other digital assets. The latest criticism has come from European Central Bank (ECB) president Christine Lagarde, who said crypto is both based on and worth “nothing.”
Speaking on Dutch television recently, Lagarde made her feelings on the subject very clear. “I have said all along the crypto assets are highly speculative, very risky assets,” she explained. “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.”
As the caretaker of the euro, we @ecb want to keep an open dialogue with the people we serve.
I had the pleasure to answer students’ questions about inflation, the war in Ukraine and my career.
— Christine Lagarde (@Lagarde) May 22, 2022
Lagarde’s comments come at a time when crypto is facing a major crisis. The collapse of Terra and its support coin Luna earlier this month decimated the value of the crypto markets, which have been facing the added pressure of increased regulatory scrutiny and the Russia/Ukraine war. Bitcoin’s price is down by almost 50% compared to six months ago, and Ethereum has fallen around 42% in the last month.
Lagarde isn’t a complete crypto skeptic, though. She also talked about the ECB’s digital Euro project, which is expected to arrive in the next four years. “The day when we have the central bank digital currency out, any digital euro, I will guarantee — so the central bank will [be] behind it and I think it’s vastly different than many of those things,” she added.
While the ECB president admitted that she practiced what she preached by not holding any crypto assets herself—though she follows them “very carefully”—one of her sons has invested, going against his mother’s advice. “He’s a free man,” she said.
The comments arrived soon after Sam Bankman-Fried, crypto billionaire and founder/CEO of crypto exchange FTX, said that he doesn’t see a future for Bitcoin as a payments network. He criticized BTC’s proof-of-work system for its high environmental costs and inefficiency.