According to Derville Rowland, one of Ireland’s senior officials, the rising popularity of cryptocurrencies like bitcoin is of great concern.
In an interview, the central bank’s director general for financial conduct warned that Crypto assets are quite a speculative and unregulated investment. Individuals should be very conscious that they could lose the entire investment.
Rowland, whose department at Ireland’s central bank is notorious for levying large fines on some of the country’s largest financial businesses, joins a long list of central bankers who have warned against cryptocurrency investments.
Governor of the Bank of England Andrew Bailey has warned that cryptocurrencies have no fundamental value and that a consumer should only invest if they are willing to lose their money. Last week, Bank of Japan Governor Haruhiko Kuroda joined the chorus of worry, stating that Bitcoin’s volatility is extremely high. Bitcoin has increased by around 30% a year so far.
Rowland is a force to be reckoned with when it comes to regulation. She will take over as chairwoman of the European Securities and Markets Authority’s (ESMA) investment management standing committee in July, a panel that assists in the development of fund sector regulations.
Her ascension to fame came as a result of her role as the face of the Irish central bank’s enforcement investigations. Most of Ireland’s retail banks have recently been fined or are under investigation for mortgage overcharging, according to the regulator. It punished Davy, the nation’s largest securities business, in March for breaches that resulted in the CEO and other executives resigning. As a result of the aftermath, that company is now for sale.
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Cryptocurrencies aren’t the only digital assets that make regulators nervous. The so-called ‘gamification‘ of stock investment has also gotten a lot of attention, and Rowland believes it will soon become a European issue.
Critics accuse online brokerages like Robinhood Markets Inc. of turning trading into a social activity by bringing a flood of mom-and-pop investors into the US market. People could be in a very vulnerable position if they are effectively relaying on message boards as a substitute for investment and financial advice. Readers of online platforms like Reddit have wrecked shares of companies like GameStop Corp. and AMC Entertainment Holdings Inc. General people could find themselves in a very delicate position if they are blindly using message boards as a substitute for investment and financial advice.
The European Securities and Markets Authority, as well as Ireland’s central bank, have discussed the problem, according to Rowland. While no timeline for new standards has been set, she believes that regulations should be technology neutral. So that we don’t receive stronger safeguards in older paper-based processes than we do in more online ones.
It’s a long journey.
Rowland has long advocated for increased diversity in the financial services business, which she believes will assist strengthen regulation.
Diversity improves decision-making, risk management, and performance, she said, adding that the industry still has a long way to go.
The investment management industry is not diversified, and it needs to put in a lot more effort on this front. It’s something they’ve brought to the attention of the boards, and it’s something she is passionate about.