Portugal’s Central Bank Chief Labels Cryptocurrency Unsustainable, Advocates for Worldwide Regulation

Mário Centeno, the governor of Banco de Portugal, emphasized the need for a global approach to regulating cryptocurrencies during his keynote address at the 2023 Banco de Portugal Financial Stability Conference on October 2. Centeno, echoing sentiments from regulators worldwide, argued that managing the complexities of crypto assets and decentralized finance requires a coordinated international effort.

In his speech, Centeno warned against the illusion that individual nations could effectively oversee these global risks independently. He advocated for the creation of a robust global framework to prevent regulatory arbitrage, emphasizing the limitations of national-level regulations in addressing the challenges posed by digital assets.

Specifically addressing the volatile nature of crypto assets and decentralized financial systems, Centeno expressed skepticism about their long-term viability. He pointed out the undeniable risks associated with these products, highlighting their surge in popularity during the COVID-19 pandemic, which ultimately proved unsustainable and led to the collapse of several crypto-based products.

While Centeno commended the European Union’s efforts in establishing the Markets in Crypto-Assets (MiCA) regulations, he stressed the importance of further international consolidation of regulatory initiatives. He emphasized the principle of “same risk, same regulation,” echoing similar concerns raised by regulators like Rupert Schaefer, the executive director of strategy, policy, and control at the German Federal Financial Supervisory Authority. Schaefer recently pointed out the progress made through MiCA adoption in the EU but highlighted the existing inconsistencies in crypto regulations globally.

Centeno’s call for global collaboration mirrors the sentiments expressed by other world leaders, including Indian Prime Minister Narendra Modi, who also advocated for international cooperation in formulating crypto regulations during the annual G20 summit held in August. As the crypto landscape continues to evolve, regulatory authorities worldwide face the challenge of developing comprehensive and unified approaches to ensure financial stability and consumer protection in the rapidly changing digital asset ecosystem.

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