Gabriel Makhlouf, the governor of Ireland’s central bank, has asked legislators to create regulations for cryptocurrencies, particularly those that would prevent predatory advertisements from being presented to young adults and protect retail customers in the industry.
Speaking to the Joint Committee on Finance, Public Expenditure and Reform on Wednesday, Maklouf, a long-time critic of crypto assets, expressed concern over cryptocurrencies that are not linked to any underlying assets, likening them to a Ponzi scheme.
According to him, “unbacked crypto is essentially a Ponzi scheme”, and investing in such assets was essentially gambling. “When you gamble you can win, but most of the time when you gamble, you’re actually losing,” he said.
He went on to note that they were still “very concerned” about the impact of crypto assets on retail customers, despite the stability of major cryptocurrencies improving in recent months. He was particularly bothered by the growing number of crypto adverts which he felt were often used to deceive and manipulate young people with limited financial literacy or experience into investing in risky or volatile products.
“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 that cohort. If you could find a way, I would recommend that adverts to that cohort are banned,” said Makhlouf.
Last march, the top bank warned consumers about the risk of “misleading” ads promoting crypto investments, particularly those pushed by social media influencers. At the time, it also emphasised that crypto assets were highly risky and speculative and may not be suitable for retail customers.
On the question of whether there is a need for a regulation obliging crypto firms to establish a physical presence in Ireland, the governor noted that they would follow what they would follow EU regulations.
“One of the things we need to be conscious of is that we don’t introduce rules that contravene EU law. At the EU level, we expect certain standards to be followed by providers of that sort of service. If we’re going to say that all of these firms are essentially going to need to have a physical presence in every jurisdiction, there’s a danger you’re going to actually kill the service.”
That said, Makhlouf, generally acknowledged that the country’s financial sector had continued to change rapidly, in particular through digitalization and technological innovation, warranting them to evolve their regulatory approach. He also pledged to advocate for the enforcement of new European Union rules on crypto-currency markets while ensuring that the financial system remains stable and that businesses work in the best interests of customers and users.
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- Source: https://zycrypto.com/ireland-to-clamp-down-on-crypto-adverts-targeting-young-adults/