ECB Board Member Terms Crypto Assets as ‘Deleterious’
- Executive board member of the European Central Bank (ECB), Fabio Panetta, termed crypto deleterious.’
- He said that the perception of cryptocurrencies as a ‘store of value’ began to fade away in late 2021–2022.
- The ECB official claims that the “highly volatile” nature of crypto makes it suitable for gambling.
- He said that investors should note “that new technology does not make financial risk disappear.”
An executive board member of the European Central Bank (ECB), Fabio Panetta, has slammed cryptocurrencies and termed them “deleterious.” The official claims that the future of crypto is very dark and believes that digital assets may be used for more than just gambling among investors. Interestingly, the crypto space is often compared to gambling by regulators around the globe.
In the statement penned down for a panel at the Bank for International Settlements Annual Conference on June 23, the ECB official claimed that the general perception that investors had regarding crypto being a ‘store of value’ began to fade away in late 2021 and 2022 during the bear market, which was fueled by the collapse of multiple companies.
During that period, the total market capitalization of the entire industry went from around $3 trillion to less than $1 trillion. The ECB executive board member claims that the “highly volatile” nature of cryptocurrencies makes them suitable for gambling, adding that the digital asset space should be treated as gambling by lawmakers around the world.
Panetta noted that “due to their limitations, cryptos have not developed into a form of finance that is innovative and robust, but have instead morphed into one that is deleterious,” while adding that the “crypto ecosystem is riddled with market failures and negative externalities, and it is bound to experience further market disruptions unless proper regulatory safeguards are put in place.”
“Policymakers should be wary of supporting an industry that has so far produced no societal benefits and is increasingly trying to integrate into the traditional financial system, both to acquire legitimacy as part of that system and to piggyback on it,” said the ECB official.
The ECB official further noted that those supporting the crypto space “would do well” if they remembered the fact “that new technology does not make financial risk disappear.”
“It is like pressing a balloon on one side: it will change in shape until it pops on the other side. And if the balloon is full of hot air, it may rise for a while but will burst in the end,” said Panetta.
As reported earlier by BitcoinWisdom, the Economic and Financial Affairs Council of the European Union, composed of the finance ministers of all member states, approved the Markets in Crypto-Assets (MiCA) law in May.