‘Worth nothing!’ Top EU economist slams cryptocurrencies – is crypto safe?

Money Box: Cryptocurrency scam victim discusses his losses

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The cryptocurrency market remains in hot water as of May 24, with many established and alternative coins still pointing down. Over the last 24 hours, even flagship coins have struggled to reclaim key resistance levels, with Bitcoin still below $30,000 and Ethereum below $2,000. The market suffered another blow this week, as seasoned economist Christine Lagarde questioned its future.

Are cryptocurrencies safe?

The latest data shows that most currencies have suffered significantly following the LUNA crash, as it shook confidence in the market.

The immediate aftermath showed the inherent risks associated with investing in cryptocurrencies, as they are ultimately highly volatile.

Some people reported losing their life savings, having invested in Terra Luna, while others said their homes hang in the balance.

While it has had little effect on the wider market, the unfolding events have attracted captains of the fiat world.

Christine Lagarde, the European Central Bank president, has positioned herself firmly against cryptocurrencies.

In an interview with Dutch talk show College Talk, she said her “humble assessment” was that they were “worth nothing”.

She said the currencies were “based on nothing” and lacked an “underlying asset to act as an anchor of safety”.

Ms Lagarde also made a case for regulation, calls for which are gathering steam.

She said: “I’m concerned about those people who think it’s going to be a reward, who have no understanding of the risks, who will lose it all, and who will be terribly disappointed, which is why I believe that should be regulated.”

The ECB President did not discount digital currencies altogether, as her organisation is working on a Euro version.

An upcoming digital Euro would not work the same way as other existing currencies, Ms Lagarde said, as it would have material backing.

The Euro – set for completion within the next four years – would be “vastly different” she said.

The coin’s value would have tangible backing from the ECB and ultimately rely on the physical Euro.

The lack of underpinning attachment for some cryptocurrency projects is not the only risk investors face.

They also have to reckon with the growing prevalence of scams.

The lack of regulation touched on by Ms Lagarde means that scammers have an entire realm where they can operate with minimal scrutiny.

Scams have become rife, especially phishing and “pump and dump” schemes.

These would be illegal in more tightly regulated markets, but the limited framework governing cryptocurrency acquisitions means that those who lose valuable tokens have little recourse in getting them back.

The information in this article does not equate to financial advice. Anyone considering investing in cryptocurrency should understand the risks involved.

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