Fabio Panetta, a member of the Executive Board of the European Central Bank (ECB), has suggested a dark future for cryptocurrency, where digital assets can be used for little more than gambling among investors.
In written remarks to a panel at the Bank for International Settlements annual conference on June 23, Panetta He said The perception of cryptocurrency among investors as a “powerful store of value” began to dissipate in late 2021 and into 2022, when the total market cap fell by more than $1 trillion. According to the ECB official, the “highly volatile” nature of crypto assets makes them suitable for gambling, and they should be treated as such by global regulators.
“Due to its limitations, cryptocurrencies have not evolved into an innovative and powerful form of finance, but instead into a malicious one,” Panetta said. “The cryptocurrency ecosystem is riddled with market failures and negative externalities, and is bound to face further market disruptions unless appropriate regulatory safeguards are put in place.”
he added:
“Policy makers should be wary of supporting an industry that has not yet produced any societal benefits and is increasingly trying to integrate into the traditional financial system, to gain legitimacy as part of that system and engage with it.”
The Crypto company has relied on constantly creating new narratives to attract new investors, but it has failed to deliver on its promises. Policymakers should be wary of supporting an industry that has not yet delivered any benefit to society.
Read the letter https://t.co/okum8fH3qf
1/3 pic.twitter.com/40OlefVExB
– European Central Bank (ECB) June 23, 2023
Panetta claimed that the “security, scalability, and decentralization” of cryptocurrency transactions is “unachievable,” saying that immutability of blockchains is a downside of the space due to the inability to often reverse transactions. He cited the collapse of FTX as well as a recent lawsuit filed again by the SEC against Binance as “fundamental shortcomings” in the ecosystem.
Related: CZ addresses the reasons behind Binance’s recent FUD
“Cryptocurrency enthusiasts would do well to remember that new technology does not make financial risks go away,” said the ECB official. “It’s like squeezing a balloon on one side: it will change shape until it pops on the other side. If the balloon is filled with hot air, it may rise for a while but eventually it will burst.”
Panetta has previously supported parts of the ECB’s plans for a potential digital euro, which is currently being considered by the central bank. He also suggested banning crypto assets with an “excessive environmental footprint” as part of efforts to address risks to the environment.
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