My Background is a bit, blurry and pixelated

I just put my background image for my game in the testing phase, and I hit a rather, unusual snag.
The background is like, extremely pixilated. And I am not sure why it is doing that, or what I need to do to fix it.

I initially have it as a "sprite" where it appears to be clear outside of the game, but the minute I run the test, it is all pixilated.

Do I have to put it as a specific asset, tile, background?