Lagarde made these comments during an appearance on the Dutch television program "College Tour." She said: "I am concerned for 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 [cryptocurrencies] should be regulated."
The comments come as the cryptocurrency market is experiencing a significant drop in value across the board. Bitcoin and Ethereum, the two largest and most valuable cryptocurrencies, have halved in value from their peaks late last year. (Related: Bitcoin price briefly falls below $26,000 as crypto sell-off erases more than $200 billion from the market.)
At the same time, cryptocurrencies are facing tougher scrutiny from governments around the world worried about the dangers decentralized financial networks pose to their more centralized financial systems.
"I have said all along the crypto assets are highly speculative, very risky assets," said Lagarde. "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.
Lagarde has in the past spoken in favor of global regulations on cryptocurrencies. In January, she told Reuters that Bitcoin has been used for money laundering and that measures need to be enacted to prevent this.
She called Bitcoin a "highly speculative asset" that groups have used to conduct "some funny business and some interesting and totally reprehensible money laundering activity."
A member of the show's audience told Lagarde that they invested 7,000 euros ($7,506) in ADA, the internal cryptocurrency of the blockchain platform Cardano. As of press time, one ADA token is worth roughly 50 cents. "That hurts," said Lagarde.
When asked whether Lagarde invests in cryptocurrency, she said she does not hold any crypto assets because she wants to practice what she preaches. But she learns all she can about the cryptocurrency market after one of her sons, against her advice, invested in crypto.
"He's a free man," she said.
Despite her criticism of cryptocurrencies and her support for more regulation in the crypto market, Lagarde is still very supportive of the ECB's digital euro project, a central bank digital currency (CBDC) that may be fully implemented in the next four years.
She claimed that, with the backing of the ECB, she can guarantee that the digital euro will be "vastly different" from cryptocurrencies.
Other ECB executives have already voiced their concerns regarding cryptocurrencies, including the central bank investing heavily in its own digital currency assets.
Fabio Panetta, member of the ECB executive board, said last month that cryptocurrency assets "are creating a new Wild West." He drew parallels to the subprime mortgage crisis of 2008 which led to the Great Recession.
Many other central banks are already working on their own virtual alternatives to cash in on the rapid growth of digital currencies.
As of March 2022, nine countries and territories have officially launched CBDCs. Another 80 countries have launched initiatives and projects to implement CBDCs in their jurisdictions, including the Bank of England and the Bank of Canada.
The United States is investigating whether launching a Federal Reserve-backed digital currency can improve the domestic payments system, increase transaction efficiency and reduce costs. President Joe Biden has already directed federal agencies to evaluate the kind of infrastructure that needs to be built to support the issuance of an American CBDC.
Learn more about cryptocurrencies at CryptoCult.news.
Watch this episode of the "Health Ranger Report" as Mike Adams, the Health Ranger, talks about how, even though cryptocurrency is crashing, people should still learn how to use it.