Belgian Central Bank Warmed by Crypto Winter

The Belgian Central Bank Governor says his organization celebrated the 2022 slump in crypto prices – and says last year’s onset of crypto winter “was good news for us.”

Per Business AM, Governor Pierre Wunsch called the crypto “implosions” of last year “good news in themselves for us.”

The media outlet noted that “us” in this case referred to “the regulators of the stability of the conventional financial system.”

Wunsch stated that the bank had been “concerned about the growing importance of cryptocurrency investments due to their potential impact on financial stability.”

But, he stated:

“The crashes ultimately took place without any impact on financial stability. So the problem solved itself.”

In its review of the Financial Year 2022, the bank celebrated the fact there was “little” in the way of “contagion from the crypto market” to “the equity markets.”

The bank wrote:

“As there are few interconnections between regulated financial institutions and the world of crypto, the impact of [crypto market] turbulence on the traditional financial system remained low.”

The media outlet explained that “the turmoil” of 2022 “at least temporarily halted the rise of crypto.” This was “something the financial establishment didn’t want to see happen,” Business AM wrote.

Wunsch added that crypto shared “strong similarities with financial bubbles of the past.” And he called “the valuation” of crypto “highly speculative.”

The media outlet added that the report “indirectly referred” to the “unsavory practices” of the crypto exchange FTX.

Belgian Central Bank: Why Did it Welcome Crypto Crash?

Business AM noted that central banks “are not a neutral party when it comes to cryptocurrencies.” The media outlet explained that this was because “they are working on their own digital currencies – namely central bank digital currencies (CBDCs).”

Bitcoin (BTC) prices dropped to below the $16,000 mark in November last year, down from a high of almost $48,000 around this time last year.

Last year, the government introduced a rule that obliges all exchanges and wallet providers to register with the regulatory Financial Services and Markets Authority (FSMA).