ECB official calls crypto ‘deleterious’ with ‘no benefit to society’ in scathing speech

[ad_1]

European Central Bank (ECB) board member Fabio Panetta suggested a bleak future for cryptocurrencies, in which digital assets could be used for little more than gambling among investors.

In remarks written for a panel at the Bank for International Settlements annual conference on June 23, Panetta said the perception of cryptos among investors as a robust store of value began to dissipate at the end of 2021 and in 2022, when the total market capitalization fell by more than $1. trillion. According to the ECB official, the highly volatile nature of crypto assets made them suitable for gambling and should be treated as such by global lawmakers.

Due to its limitations, cryptos have not evolved into an innovative and robust form of finance, but rather morphed into a deleterious form of finance, Panetta said. The crypto ecosystem is riddled with market failures and negative externalities, and it is bound to face further market disruptions unless proper regulatory safeguards are put in place.

He added:

Policymakers should be wary of supporting an industry that has so far produced no benefit to society and is increasingly trying to integrate into the mainstream financial system, both to gain legitimacy as a as an integral part of this system and to be added to it.

Panetta asserted that the security, scalability, and decentralization of crypto transactions were not achievable, saying the immutability of blockchains was a negative aspect of the space due to the fact that transactions often could not be cancelled. He cited the collapse of FTX as well as a recent lawsuit filed by the U.S. Securities and Exchange Commission against Binance as fundamental flaws in the ecosystem.

Related: CZ Addresses Reasons for Binance’s Recent FUD

Crypto enthusiasts would do well to remember that new technologies do not make financial risk disappear, the ECB official said. It’s like pressing a balloon on one side: it will change shape until it bursts on the other side. And if the balloon is full of hot air, it may rise for a while but will eventually burst.

Panetta has previously backed parts of the ECB’s plans for a potential digital euro, which are currently being studied by the central bank. He also proposed banning crypto assets with excessive ecological footprints as part of efforts to address environmental risks.

Magazine: Crypto Reviews: Can FUD Help?

[ad_2]