Asharq Al-awsat English Middle-east and International News and Opinion from Asharq Al-awsat Newspaper

One in 10 European Households Invest in Cryptocurrencies

One in 10 European Households Invest in Cryptocurrencies

Thursday, 26 May, 2022 - 07:00

Nearly one in 10 European households has invested in crypto assets, an ECB (European Central Bank) study published Tuesday said, highlighting high demand for the risky investments, which witnessed significant devaluation this month.

These novel assets lure middle class people, but “it is worth nothing. It’s not a safe investment,” said European Central Bank President Christine Lagarde.

"As many as 10 percent of families in six large eurozone countries, including Belgium, Germany, Spain, France, Italy and the Netherlands said they owned crypto assets,” reported the study. The proportion of crypto owners varied between the countries, with the figure as low as six percent in France and above 15 percent in the Netherlands.

"On average, young adult males and highly educated respondents were more likely to invest," the report said. In the study, which was included in the semi-annual financial stability report published on May 25, the European Central Bank has called for global regulations of this novel sector threatening households’ finances.

The total size of the crypto market reached a high of over 2.5 trillion euros "in late 2021" and was still "seven times bigger than it was at the start of 2020" despite recent drops, the report said. Over 16,000 cryptocurrencies are available today, and an average of 10 collections are launched every day, according to the study.

“I’m concerned about those people 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,” Lagarde told the Dutch media on Saturday.

Lagarde’s comments come amidst heavy fluctuations in the cryptocurrency market, with the value of Bitcoin and Ethereum plunged 50 percent since last week.

Meanwhile, regulators are closely monitoring this asset category (a group of investments with similar characteristics and subject to the same regulations) considering the risks it may pose to the broader financial system.

The European Central Bank President believes that, unlike the digital euro expected to launch in four years, the value of cryptocurrencies is uncertain.

“My very humble assessment is that it is worth nothing. It is based on nothing. There is no underlying asset to act as an anchor of safety,” said Lagarde. “On the day the ECB launches its own cryptocurrency, the digital euro, it will be secure – the central bank will back it. A digital euro would be ‘vastly different’ from private cryptocurrencies,” she added.

Editor Picks