According to Makhlouf, cryptocurrencies present a minimal risk to financial stability, but they can significantly affect retail customers. As most of the coins are not backed by any fiat currencies or other assets, a ban should be imposed on crypto advertisements.
The Governor of the Central Bank of Ireland Gabriel Makhlouf, known for his skepticism towards crypto, has called for banning crypto ads. Believing that crypto ads often lead to Ponzi schemes, Irish Central Bank Crief said that investing in “unbacked” cryptocurrencies is “essentially gambling.” And young people become the targets most often.
Gabriel Makhlouf stated:
“Unbacked crypto is essentially a Ponzi scheme… People who put their money into unbacked crypto, and most of the significant stock of crypto out there is unbacked, they are essentially gambling. When you gamble you can win, but most of the time when you gamble, you’re actually losing.”
He further added:
“There’s a reasonable number of young adults who have put their money into crypto and there is an uncomfortable level of advertising that is targeted at the cohort. If you can find a way, I would recommend that adverts to that cohort are banned.”
According to Makhlouf, cryptocurrencies present a minimal risk to financial stability, but they can significantly affect retail customers. As most of the coins are not backed by any fiat currencies or other assets, a ban should be imposed on crypto advertisements. Notably, Makhlouf believes that the upcoming EU legislation regarding stablecoins that are actually backed by fiat currencies will not solve the issue.
This is not the first time Irish Central Bank is warning about crypto-related ads that can be misleading. Back in March 2022, the institution issued a warning that emphasized the risky and speculative nature of crypto assets, which means they may not be suitable for retail customers.
EU’s Progress in MiCA Development
Recently, the EU introduced MiCA (Markets in Crypto Assets) legislation that would establish harmonized rules for crypto-assets at the EU level, thereby providing legal certainty for crypto-assets not covered by existing EU legislation. By enhancing the protection of consumers and investors as well as financial stability, the regulation promotes innovation and the use of crypto-assets. The regulation identifies and covers three types of crypto-assets, namely asset-referenced tokens (ART), electronic money tokens (EMT), and other crypto-assets not covered by existing EU law.
Initially, the European parliamentary committee passed the MiCA legislation in October 2020, roughly two years after its initial introduction in September 2020. In November, EU members were supposed to vote on it. However, the vote was postponed to February 2023. Recently, the EU announced another delay of the final vote on MiCA until April this year due to a technical issue. In particular, the 27-member state intergovernmental union decided to defer the decisive vote on its highly anticipated crypto ruleset. The guiding 400-page legal document could not be translated into all the Union’s official languages, which is mandatory in order to comply with EU regulations that require publishing in all its 24 official languages.
Darya is a crypto enthusiast who strongly believes in the future of blockchain. Being a hospitality professional, she is interested in finding the ways blockchain can change different industries and bring our life to a different level.
