Fabio Panetta, a member of the executive board of the European Central Bank (ECB), suggested a dark future for cryptocurrencies, in which digital assets can be used for little more than gambling among investors.
In comments written for a panel at the Bank for International Settlements Annual Conference on June 23, Panetta saying The perception of cryptocurrencies among investors as a "solid store of value" began to dissipate in late 2021 and in 2022, when the total market capitalization fell for more of $1 trillion. According to the ECB official, the "highly volatile" nature of crypto assets made them suitable for gambling, and global lawmakers should treat them as such.
“Because of its limitations, cryptocurrencies have not become an innovative and robust form of financing, but rather one that is detrimental,” Panetta said. “The crypto ecosystem is plagued by market failures and negative externalities, and is bound to experience further market disruption unless proper regulatory safeguards are put in place.”
added:
“Policymakers must be careful about supporting an industry that has so far failed to produce social benefits and is increasingly trying to integrate into the traditional financial system, both to gain legitimacy as part of that system and to take advantage of it.”
Crypto has relied on constantly creating new narratives to attract new investors, but it hasn't delivered on its promises. Policy makers must be careful in supporting an industry that has so far failed to produce benefits for society.
read the speech 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 crypto transactions was "not achievable," saying that the immutability of blockchains is a negative aspect of the space due to the fact that transactions often cannot be reversed. He cited the collapse of FTX, as well as a recent lawsuit filed by the United States Securities and Exchange Commission against Binance as "fundamental shortcomings" of the ecosystem.
Related: CZ Addresses Reasons Behind Binance's Recent FUD
“Cryptocurrency enthusiasts would do well to remember that new technology does not make financial risk go away,” the ECB official said. “It's like pressing a balloon on one side: it will change shape until it bursts on the other side. And if the balloon is filled with hot air, it may rise for a while, but eventually it will burst."
panetta formerly supported parts of ECB plans for a potential digital euro, currently under investigation by the central bank. He also has proposed to ban crypto assets with an “excessive ecological footprint” as part of efforts to address risks to the environment.
Magazine: Crypto Critics: Can FUD Ever Be Useful?