The EU is not overly alarmed at the growing use of crypto-assets, the EU Commissioner for financial services, financial stability and Capital Markets Union has said.
But Mairead McGuinness also warned that any new financial instrument that is growing and unregulated can cause enormous problems if “we don’t get to grips with it”.
Earlier this week the Financial Stability Board warned that the crypto assets market poses a threat to global financial stability.
Ms McGuinness told the Financial Times and IDA Ireland European Financial Forum 2022, that Europe has moved on the issue of cryptocurrencies and in some ways is already ahead of the curve.
She also acknowledged that proposals in this area need to be future focused.
“When you hear that people are taking financial advice on TikTok or through other social media platforms, or that young people are engaging with their pals in investing in various cryptocurrencies almost as a past time, it doesn’t sound alarming,” she said.
“But of course the collective activities are alarming if they are not regulated, and this is why there is a global need for principles around the whole crypto space.”
She added that it was important not to stifle the good and upsides of technology and finance.
“But clearly there are risks and I think that is why the warnings coming,” she said.
There is a lot of money invested in crypto she said, but questioned whether people are really aware that if they invest they can lose and are clear of the risks.
“If they are not we need to do something about that,” she said.
She added that the EU also needs to understand the investment requirements and thought processes of a younger generation and not be only guided by past experiences.
As a result, she said, the EU is trying to future gaze and look for gaps in regulation.
“But I don’t want to suggest that we are overly alarmed,” she said
“But what I do want to say is that anything that is growing and unregulated can cause enormous problems if we don’t get to grips with it.”
On the issue of Capital Markets Union, Ms McGuinness said it is a work in progress and progress has been made.
She said work in the area is incremental and the EU does sit back and think about it as it evolves.
She added that proposals on corporate insolvency would be published by the end of this year.