The European Central Bank has become very outspoken on cryptocurrencies in recent times. Notably, a survey by the leading financial authority revealed that 10% of households in the Eurozone hold crypto assets.
European Households Adopt Crypto Even As The ECB Raises Concerns
A recent survey by the ECB on Tuesday has revealed that one in ten households in the bloc own cryptocurrencies. The survey is part of the ECB’s Consumer Expectation Survey, which obtained its results by evaluating data from six countries.
According to the data, most crypto holders reported owning less than €5000 (approximately $5,366) in crypto, while 6% of those holding more than €5000 admitted to having more than €30,000 ( approximately $32,189) in crypto. The data also showed that well-educated respondents were more likely to invest in crypto.
However, the ECB is not pleased with this development, as it states in its latest financial stability report. According to the ECB, most retail investors have no business investing or trading crypto.
“Crypto-assets are not suitable for most retail investors (either as an investment or store of value or as a means of payment) who could lose a large amount (or even all) of the money they have invested,” read the report.
Meanwhile, rising retail crypto investment was not the only trend that raised concerns for the European apex bank. The ECB also expressed concern over the increased involvement of institutions in the nascent market, citing risks of losing capital and investor confidence. Furthermore, the report read, “If current growth and market integration trends persist, then crypto-assets will pose a risk to financial stability.”
The Call For Regulation
Following all of these concerns, the ECB has called for regulatory actions, noting that it has risen to a level of global concern even as it said crypto lending could fall under the purview of existing financial regulations citing cases in the US. “It is therefore key for regulators and supervisors to monitor developments attentively and close regulatory gaps or arbitrage possibilities. As this is a global market and therefore a global issue, global coordination of regulatory measures is necessary,” the report read.
Notably, the EU is already preparing its crypto regulatory framework, Markets in Crypto Assets (MiCA). Lawmakers have been faced with a sense of urgency to finish the regulations following the unrest in Eastern Europe brought by Putin’s invasion of Ukraine. MiCA moved into the Trilogue stages in March after a near Bitcoin ban.
“Both in absolute numbers & relative to its GDP, Europe is the region with the highest crypto-asset activity. One of the many reasons why EU institutions should embrace crypto instead of fearing it. For once, we could actually be leading in tech adoption,” tweeted Patrick Hansen, a crypto venture advisor and European stakeholder urging lawmakers to create favorable rules considering the bloc’s advantage in numbers.
