08 Dec 2022
European Central Bank official demands a ban on cryptocurrency
A senior European Central Bank executive, Fabio Panetta, once more compared investing in cryptocurrencies to gambling and called for a ban on cryptocurrencies with an "excessive ecological footprint."
He suggested outlawing digital assets like bitcoin that rely on the proof-of-work algorithm to validate transactions (BTC-USD).
Even though recent legislation known as MiCA may require businesses to report any potential environmental impact, EU officials have previously rejected an outright ban on cryptocurrency mining.
In a speech for the Insight Summit at the London Business School, the European Central Bank (ECB) executive board member launched a salvo against the crypto-ecosystem.
According to him, “many cryptocurrencies are just a new way of gambling,” drawing parallels between the two industries.
“On the whole, it is difficult to see a justification for the existence of unbacked crypto-assets in the financial landscape. Their combined features mean that they are just speculative assets. Investors buy them with the sole objective of selling them on at a higher price. In fact, they are a gamble disguised as an investment asset.”
As the “house of cards” collapses, Panetta urged investors to avoid putting money into cryptocurrencies.
He countered one of the philosophical justifications for bitcoin's existence, which holds that the world requires a new economic system that does not rely on “trusted” intermediaries like central banks.
The ECB official stated:
“Trust cannot be replaced by religious faith in an algorithm.”
Instead, he advocated for “Central Bank Digital Currencies,” digital currencies issued by central banks (CBDCs). He continued:
“To harness the possibilities of digital technologies, we must provide solid foundations for the broader digital finance ecosystem. This requires a risk-free and dependable digital settlement asset, which only central bank money can provide. And that is why the ECB is working on a digital euro while also considering new technologies for the future of wholesale settlement in central bank money.”
The European Central Bank (ECB) has been working on a project to create a Euro Central Bank Digital Currency (CBDC) since July 2021.
The European Commission announced earlier this year that it will propose a bill to introduce a CBDC in early 2023.
Panetta's thoughts on “unbacked” crypto assets were summarized in a Twitter thread published by the ECB yesterday.
A senior ECB official has voiced concerns about using “unbacked” cryptocurrencies. When he said “unbacked,” he referred to bitcoin, Ethereum, and other cryptocurrencies not supported by a central bank through the fiat currency system.
Bitcoin gained 0.5% in 24 hours to $16,850 on Thursday, while Ethereum (ETH-USD) gained 1.2% to $1,240.
Disclaimer: Nothing on this site should be construed as a financial investment recommendation. It’s important to understand that investing is a high-risk activity. Investments expose money to potential loss.
