European Securities and Markets Authority Chairwoman Verana Ross said the current economic situation, characterized by high inflation, could serve as a catalyst for increased investment in bitcoin.
The official warned that given the likely increase in bitcoin use, the European Union should be prepared to regulate it.
With inflation on the rise, investors will look for instruments that can offset inflation and generate higher returns, which can increase the riskiness of investments. That’s something we’re watching very closely,” Ross said.
The chair called for a common European approach to cryptocurrency regulation to improve the current framework, which relies heavily on national laws. Right now, Ross said, there is an imbalance among regulators.
The ECB is currently among the organizations leading the way in regulating cryptocurrencies. Discussions about the need for regulation intensified after the Terra stabelcoin collapse, which caused millions of investors to suffer significant losses.
Amid the increased focus on regulation, the crypto market traded in the red for most of 2022, with bitcoin struggling to stay above the $30,000 mark.
Despite the price correction, the number of cryptocurrency holders in Europe has grown: an ECB report shows that about 10% of households in the eurozone own cryptocurrencies.