European Central Bank chief Christine Lagarde is facing a Bank of Japan-style conundrum with a strong currency balanced against deflationary risk. Photo: AFP

European Central Bank President Christine Lagarde called on Wednesday for global action to regulate bitcoin, saying that the leading crypto is used by money launderers and that loopholes must be closed.

“[Bitcoin] is a highly speculative asset, which has conducted some funny business and some interesting and totally reprehensible money laundering activity,” Lagarde said in an interview at the Reuters Next conference.

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The crypto sector is still mostly lightly overseen or unregulated, although global standards have emerged in areas such as anti-money laundering (AML) and know-your-customer (KYC).

Lagarde, who failed to provide specific examples of the crypto being used for money laundering, narrowly avoided a one-year jail sentence in 2016 when she was convicted of a crime she committed as France’s finance minister.

French judges found Lagarde guilty of negligence for failing to challenge a €400-million state arbitration payout to a friend of former French president Nicolas Sarkozy, The Independent reported.

Further undermining her credibility in the eyes of critics, many commercial banks within Lagarde’s sphere of influence have been investigated for money laundering and fined.

“All 10 of Europe’s biggest banks, including HSBC, Barclays, BNP Paribas, Société Générale and Santander have fallen foul of anti-money laundering authorities, while recent crises at the likes of ING, Danske Bank and Deutsche Bank only reinforce this impression, demonstrating how no bank is immune to money laundering sanctions, no matter how large,” The Week reported.

In March 2020, Fortune reported, “Regulators hit banks with a near record $10 billion worth of fines in a 15-month period through 2019, and the figure is expected to increase in 2020… 60.5% of the fines came from banks violating anti-money laundering rules.”

Lagarde’s statement was widely mocked on Twitter.

Bitcoin billionaire Tyler Winklevoss tweeted, “This irony is so rich. #Bitcoin is a reaction to all of the ‘funny business’ that central bankers have been perpetrating on the people for centuries. Bitcoin is a movement that is here to stay, it is never going away.”

Tahinis Restaurants, a Canadian chain that converted its cash reserve into bitcoin, tweeted that the adoption of the top crypto was a response to currency debasement caused by central bank money printing: “Haha! When you print trillions and steal years of working hours from millions of people. The world engineers a way to react. It’s about time”

Max Keiser, host of RT’s Keiser Report and veteran hard-money advocate, suggested that the central banker’s efforts to tame bitcoin would prove to be utterly futile. He tweeted, “Christine Lagarde orders all triangles to have 200 degrees, Gold’s atomic weight moved to 42, gravity to stop working in Jamaica, water to stop being wet and Kangaroos to host cooking shows.”