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Banque de France Governor calls for urgent crypto regulation in Europe

on Jul 5, 2021
  • Per François Villeroy de Galhau, cryptocurrencies will weaken the euro’s international role.
  • Galhau stresses that Europe should introduce crypto regulations in the coming months.
  • AMF’s chairman, Robert Ophèle, believes fair regulations will boost crypto innovation in the EU.

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François Villeroy de Galhau, the Governor of the French Central Bank, Banque de France, has called upon Europe to introduce a regulatory framework for cryptocurrencies. A report unveiled this news on June 29, citing Galhau, who spoke during the Paris EUROPLACE Annual Financial conference. Reportedly, the central banker believes digital currencies are increasingly weakening the international role of the euro.

In the report, Galhau said that Europe must be prepared to act quickly when it comes to digital currencies or payments. He added that failure to give this matter the attention it deserves might see Europe lose its grip on monetary sovereignty. According to him, lacking a framework for governing the nascent sector will see Europe fail to bolster the international role of the rule. Even worse, Galhau believes the euro’s preservation might take a significant blow.

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To this end, he said,

I must stress here the urgency: we do not have much time left, one or two years.

Through this warning, Galhau reiterated his initial stance on digital currencies, in which he claimed stablecoins and central bank digital currencies pose risks to the stability of the financial system. He said this during the Bundesbank virtual autumn conference 2020, adding that Europe needs to develop a broader regulatory framework to accommodate such currencies.

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Varying outlooks from different regulators

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While Galhau’s stance on digital assets is bearish, Robert Ophèle, the Chairman of the market regulator in France, the Autorité des Marchés (AMF), has a positive outlook. According to him, introducing fair crypto regulations might help drive more innovation in the burgeoning asset class. Ophèle said this during the 5th Annual Conference Fintech and Regulation in February this year.

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He welcomed the European Commission’s idea of regulating the crypto space, which involves launching a pilot program for markets willing to trade in cryptos. He also supported the commission’s introduction of the Markets in Crypto-Assets Regulation (MiCA) policy. However, Ophèle cautioned that regulations that are too stern would stifle crypto innovation in the European Union.

In his speech, Ophèle said, the regulation of products that don’t qualify as financial instruments is key, seeing as the rapidly expanding crypto space comes with some hidden risks. However, he pushed for the implementation of a legislative proposal that covers digital assets that meet the requirements of becoming financial instruments.

Highlighting perks of both proposals, Ophèle said, MiCA would close a loophole. On the other hand, the pilot regime would prepare tomorrow’s financial market.

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