Central Bank of Ireland Governor Gabriel Makhlouf recently made a statement about the crypto asset market, warning customers that digital tokens that have no tangible asset backing them may more accurately resemble “Ponzi schemes” than actual investments. He noted that regulators are open to crypto assets that are backed by tangible assets such as actual cash, but also highlighted the potential financial damage that consumers face concerning unbacked crypto assets. Makhlouf made a comparison between purchasing these assets and buying a lottery ticket, clarifying that it’s possible to win, but it’s highly unlikely.

Supporting his statement, the European Parliament recently passed a set of regulations regarding crypto-asset markets collectively referred to as the Markets in Crypto Assets (MICA) regulation. This is the world’s first complete set of regulations for both issuing and trading of digital tokens such as Bitcoin.

In spite of this, the Irish government is still taking steps to encourage blockchain firms to operate within Ireland by assigning Irish Funds the responsibility of drafting a White Paper on crypto-assets and digital assets, to be presented to the fintech steering committee of the Department of Finance.

While the sector is striving for legitimacy, Makhlouf’s words are thought to have rattled the crypto asset market. It’s essential to note that crypto-assets should be treated with a large dose of skepticism and that gaining further education on this asset class is a must. It’s also wise to consult a financial advisor or expert before investing in any crypto asset. The potential benefits of this innovative technology should not be ignored, but it’s also important to be aware of the risks associated with this new asset class.



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