Crypto Criticised as ‘Deleterious’ with ‘No Societal Benefits’: ECB Official’s Scathing Speech

ECB Executive Board Member Predicts Bleak Outlook for Cryptocurrencies

Fabio Panetta, a member of the European Central Bank’s (ECB) executive board, has predicted a bleak outlook for cryptocurrencies, suggesting that they may be limited to use only for investor gambling.

At a Bank for International Settlements Annual Conference panel on June 23, Panetta stated in his written remarks that the notion of crypto being a “solid store of value” among investors began to diminish in late 2021 and early 2022, when the total market capitalization dropped by over $1 trillion. The European Central Bank representative went on to say that due to the highly volatile nature of digital assets, they should be regarded as a form of gambling by international legislators.

“Cryptos have not become an advanced and reliable form of finance,” stated Panetta, “but rather, have deteriorated into something detrimental. The crypto system is full of market failings and damaging externalities, and it is destined to experience further market upheavals unless proper regulatory safeguards are implemented.”

He further stated:

Leon Panetta asserted that the “security, scalability and decentralization” of crypto transactions were “not attainable”, citing the immutable nature of blockchains as a downside since transactions are usually not reversible. He pointed to the failure of FTX as well as the recent lawsuit filed by the United States Securities and Exchange Commission against Binance as “basic inadequacies” of the system.

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The ECB official cautioned that “crypto enthusiasts should be aware that new technology does not eliminate financial risk,” likening it to “pressing a balloon on one side: it will shift until it pops on the other side. And if the balloon is filled with hot air, it might ascend for a time, but will eventually burst.”

Panetta has previously expressed his support for certain aspects of the European Central Bank’s potential digital euro project, which is currently under investigation. Moreover, he has suggested prohibiting crypto assets with an “excessive environmental impact” as part of initiatives to tackle ecological risks.

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