Fabio Panetta, a member of the Executive Board of the European Central Bank (ECB), has hinted at a dark future for cryptocurrencies, in which digital assets can only be used for gambling among investors.
In written remarks for a panel at the annual conference of the Bank for International Settlements, June 23, Panetta he said The perception of cryptocurrency among investors as a “robust store of value” began to fade in late 2021 and into 2022, when the total market cap dropped more than $1 trillion. According to an ECB official, the “highly volatile” nature of crypto assets made them suitable for gambling and should be treated as such by the world’s lawmakers.
“Because of their limitations, cryptocurrencies have not evolved into a form of finance that is innovative and robust, but instead have morphed into a form that is pernicious,” Panetta said. “The crypto ecosystem is riddled with market failures and negative externalities and is bound to experience further market disruption unless proper regulatory measures are put in place.”
Added by:
“Policymakers should be wary of supporting an industry that has not yet delivered any societal benefits and that is increasingly seeking to integrate into the traditional financial system, both to gain legitimacy as part of and join the system.”
Crypto relied on constantly creating new stories to attract new investors, but failed to deliver on its promises. Policymakers should be wary of supporting an industry that has yet to bring any benefits to society.
Read the speech https://t.co/okum8fH3qf
1/3 pic.twitter.com/40OlefVExB
— European Central Bank (@ecb) June 23, 2023
Panetta argued that the “security, scalability and decentralization” of crypto transactions “is not achievable,” with the immutability of blockchains being a negative aspect of the space, as transactions often cannot be reversed. Binance again cited the FTX collapse as well as the recent lawsuit filed by the United States Securities and Exchange Commission as “fundamental flaws” in the ecosystem.
Related: CZ looks at the reasons behind Binance’s recent FUD
“Cryptocurrency supporters should remember that new technology will not make financial risk disappear,” an ECB official said. “It’s like squeezing a balloon on one side: it will change shape until it pops on the other side. And if the balloon is full of hot air, it may rise for a while, but eventually it will burst.”
Panetta before supported parts of the ECB’s plans for a potential digital euro currently being explored by the central bank. He has too proposed a ban on crypto-assets with an “excessive ecological footprint” as part of efforts to address environmental risks.