European Central Bank Managing Director Proclaims Bitcoin’s Final Battle | Proskauer – Blockchain and the law

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On November 30, 2022, amid the tumult rocking the cryptocurrency industry following the latest collapse of a major crypto exchange and its repercussions throughout the crypto economy, the Chief Executive Officer of the European Central Bank (ECB) Ulrich Bindseil and adviser Jürgen Schaaf have published an article on the ECB. Blog, “Bitcoin’s last stand”, claiming that Bitcoin “has never been used in any meaningful way for legal transactions in the real world” and that its market valuation is “based solely on speculation” and, in addition, “the The bitcoin system is an unprecedented polluter.The scathing rebuke of bitcoin, the largest crypto asset by market cap, was leveled at what ECB officials say are bitcoin’s technological shortcomings that make it “questionable as a medium.” of payment” and “rarely used for legal transactions”, since real Bitcoin transactions are “heavy, slow and expensive”. With the current price of Bitcoin having fallen since its peak of $69,000 in November 2021, officials described its current price (below $20,000) as “an artificially induced last gasp before the road to irrelevance”. ns made by Fabio Panetta, member of the Executive Board of the ECB, in April 2022, where he denounced the whole “crypto bet”, considering crypto-assets as “causing instability and insecurity – the exact opposite of what they promised.” (See also recent statements by a Deputy Governor of the Bank of England noting that cryptocurrency was a “bet” that should be regulated in the same way as the traditional financial sector, echoing his own remarks from November 2022 which urged “to integrate the activities of the crypto world with the relevant regulatory frameworks”).

When it comes to crypto regulation, it’s no surprise that the ECB blog post challenges what the authors see as the laissez-faire stance lawmakers have taken towards crypto assets. (“offering regulation that made crypto assets seem like just another asset class”), instead of, in their view, regulating crypto-assets “to the extent of the risks they present as a recent statement from the US Financial Stability Board (FSB) suggested last July. In the view of ECB officials, staunch crypto proponents, who have called for light or no regulation and less scrutiny from existing financial regulators such as the SEC, have been pushing a false narrative on behalf of of technology (“The belief that innovation must be left at all costs is stubbornly persisted”). They also lament the stalled progress on comprehensive crypto-asset legislation in the United States, even as the EU has finalized the text of the Crypto-Asset Markets Regulation (MiCA), which broadly would establish rules and protections for consumers/investors surrounding crypto-assets at the EU, covering so-called Asset-Referenced Tokens (ART), Electronic Money Tokens (EMT) and other crypto-assets not covered by current EU law. of the European Parliament on MiCA, the legislation tion would also govern the issuance and trading of crypto-assets and the management of the underlying assets, if any.

Across the Atlantic, the top federal regulator of the digital asset space, SEC Chairman Gary Gensler, has voiced his own brand of criticism of the crypto industry. In a recent interview with CNBC, Gensler said the crypto space “is an area that is clearly non-compliant” and that his agency would “continue on [three courses of action]…educating investors, trying to properly register intermediaries to protect the public and also being the cop on the spot. Gensler added that: “We’re going to be clear in our voice on risk, speculative risk and what appear to be largely non-compliant players.”

In response to the ECB blog post, some commentators took issue with what they saw as a number of unsubstantiated representations and overstated conclusions about Bitcoin in the article and advanced their own counter-arguments… the debate therefore continues.

Despite the critical tone taken in the ECB blog post, it should be noted that Bitcoin and its protocol are not necessarily representative of all cryptocurrencies, which are only part of the world of digital assets, which can vary in their usefulness and the technology used. As the ECB blog post states, “the use of a promising technology is not a sufficient condition for a value-added product to be based on it”. Indeed, given recent market challenges, it is likely that compelling projects involving digital assets can differentiate themselves from the myriad of tokens by developing use cases involving blockchain technologies that bring inherent value and offer usefulness.

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