Crypto Industry May Not Survive, Cannot Be Regulated Locally, Portugal Central Bank Chief Says

Updated: 03 October 2023

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The crypto industry may not survive and even if it does it can’t be regulated locally, said Portugal’s central bank governor.

“It is still unclear whether these highly volatile products are here to stay,” said Mário Centeno in a speech on Oct. 2. “These volatile products experienced an enormous surge in popularity during the Covid-19 pandemic, but proved to be unsustainable and, unsurprisingly, culminated in the collapse of several products.”

Centeno called for more international cooperation to address what he called crypto’s fragmented regulatory landscape. An international approach is needed, he said, in the same way it is needed for the oversight of bigtech companies.

”It would be short-sighted to believe that regulating and supervising these global risks and international players at the national level will suffice,” he said. ”“We need international cooperation and coordination to set up a robust framework and avoid the possibility of regulatory arbitrage.”

🇵🇹 Mário Centeno, Governor of Banco de Portugal, echoes the call for global crypto regulation, citing "undeniable risk" to their long-term sustainability. 👀💬 #CryptoRegulation #GlobalFramework pic.twitter.com/8s5z94D318

— Centurion Invest (@CENTURION_INVST) October 3, 2023

Centeno noted and acknowledged the European Union’s efforts in providing an international comprehensive crypto framework by launching Markets in Crypto-Assets (MiCA) legislation. However, he reiterated the need for further globalization of regulatory efforts based on the tenet of “same risk, same regulation.”

This stance is reflective of Portugal’s attitude towards the crypto industry. The country has set itself up as the crypto haven of Europe with regulatory efforts geared towards providing clarity and encouraging innovation.

Global Leaders Call for Consistent International Crypto Regulations

With this, Governor Centeno joins that list of national executives calling for more international regulations to govern the crypto industry.

Last month, Rupert Schaefer, the executive director of strategy, policy, and control at the German Federal Financial Supervisory Authority, also emphasized the necessity of uniform global regulation of the cryptocurrency sector.

In an official blog post, Schaefer acknowledged the clear advancements in cryptocurrency regulation, including the adoption of MiCA in the EU, the sets of recommendations from the Financial Stability Board and the International Association of Securities Commissions, as well as the Basel Committee’s new global supervisory standard for handling exposures to crypto assets.

However, he highlighted the global inconsistencies and areas where there is still room for exceptions from the quest for global regulation.

“Now the common principles must be implemented consistently and consistently worldwide. There should be no white spots in the flight radar; the global rules should also apply to niche financial centers,” he said.

🇩🇪 German crypto regulator BaFin's call for global crypto regulation echoes growing concerns about inconsistent oversight in the industry.

While the 🇪🇺 EU has taken strides with MiCA, the need for uniform global rules remains. BaFin's Rupert Schaefer likens regulators to air… pic.twitter.com/zIQk39Kp2d

— Swisstronik 🇨🇭 (@swisstronik) September 20, 2023

Similarly, during the G20 summit in August, Indian Prime Minister Narendra Modi asked for international cooperation in developing cryptocurrency rules.

According to Modi, the nature of these new technologies would have an impact on the entire world. As a result, neither a single nation nor a group of nations should control the laws, regulations, or framework that surround it.

In his elaboration, the Indian Prime Minister used the aviation sector as an example and argued that new technology like cryptocurrencies should be subject to the same worldwide laws as air traffic control and security.

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