ECB executive wants crypto regulated like gambling due to ‘speculative nature’

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Following the crypto industry crash of 2022, a European Central Bank (ECB) board member called for increased oversight of the sector

In particular, the executive, Fabio Panetta, said that investing in cryptocurrency could be likened to gambling, noting that digital assets are not economically useful, he said in a blog post on January 5.

He suggested that following the recent price movement, digital assets, due to their unsupported background, have a “speculative nature” due to fluctuation in their value and should be treated as “business game”.

“They perform no socially or economically useful function. <…> They are rarely used for payments and do not finance consumption or investment. As a form of investment, unbacked cryptos also have no intrinsic value. These are speculative assets,” he said.

Borrowing from gambling laws

Additionally, Panetta said that in enacting regulations, the agency should focus more on borrowing a sheet of existing gambling laws. At the same time, he focused on identifying ways to use digital assets for other vices such as money laundering, terrorist financing and sanctions evasion.

“Vulnerable consumers should be protected by principles similar to those recommended by the European Commission for online gambling. <…> They should be taxed according to the costs they impose on society,” he added.

It should be noted that the growth in popularity of crypto assets has led to calls for regulation over fears that the effects could impact the broader financial system. In this case, due to the minimal impact on the financial system, there have been calls to let the sector “burn out”.

However, Panetta suggested that letting the sector “self-ignite” might not be an option, citing the risks associated with the crypto industry.

CBDCs pushed

The board member further called for the need to implement central bank digital currencies (CBDCs) to counter the influence and impact of private digital assets. Notably, the ECB is among the world’s central banks in the advanced stages of the search for a possible CBDC.

It is also worth mentioning that Europe is also among the global jurisdictions pushing the discussion on crypto regulation forward. In this line, the region is working to roll out Crypto Asset Markets (MiCA) legislation.

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