ECB official labels crypto as ‘deleterious’ with ‘no societal benefits’ in scathing speech

European Central Bank (ECB) board member Fabio Panetta has hinted at a bleak future for cryptocurrencies, with digital assets likely to be used for purposes other than gambling between investors.

Panetta said in a written statement to a panel at the Bank for International Settlements annual meeting on June 23. Said Perceptions of cryptocurrencies as a “strong store of value” among investors began to fade between the end of 2021 and 2022, with market capitalization declining by more than $1 trillion. ECB officials say cryptocurrencies are suitable for gambling due to their “highly volatile” nature and should be treated as such by lawmakers around the world.

“Cryptocurrencies have not developed into an innovative and robust form of finance due to their limitations, but rather have turned into something harmful,” Panetta said. “The cryptocurrency ecosystem is riddled with market failures and negative externalities and is bound to experience further market turmoil unless appropriate regulatory safeguards are put in place.”

he added:

“Policy makers are increasingly integrating into the traditional financial system to gain legitimacy or piggyback on its legitimacy as part of the system, which so far has produced no social benefit. We should be cautious about supporting the industry.”

Cryptocurrencies have always relied on creating new narratives to attract new investors, but they have failed to deliver on that promise. Policy makers should be cautious about supporting industries that have so far provided no benefit 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 cryptocurrency transactions are “unachievable”, and that transactions are often irreversible, making blockchain immutability a major challenge in this area. Said it was a downside. He cited the collapse of FTX and the recent lawsuit filed against Binance by the U.S. Securities and Exchange Commission as “fundamental flaws” in the ecosystem.

Related: CZ Discusses Reason Behind Binance’s Recent FUD

“Cryptocurrency enthusiasts should remember that new technology does not eliminate financial risks,” said an ECB official. “It’s like pushing one side of a balloon. It changes shape until it pops on the other side. And if the balloon is filled with hot air, it may rise for a while, but eventually it will burst.” To do.”

Panetta has previously backed some of the plans for a possible digital euro that the ECB is currently investigating. He also proposed banning cryptocurrencies with “excessive environmental impact” as part of efforts to address environmental risks.

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