ECB official calls crypto 'deleterious' with 'no benefit to society' in scathing speech [Advance Cash ]

Ecb Official Calls Crypto 'Deleterious' With 'No Benefit To Society' In Scathing Speech

European Central Bank (ECB) board member Fabio Panetta suggested a bleak future for cryptocurrencies, in which digital assets could be used for little more than gambling among investors.

In remarks written for a panel at the Bank for International Settlements' annual conference on June 23, Panetta said the perception of crypto among investors as a "robust store of value" began to dissipate late in the year. 2021 and in 2022, when the total market capitalization fell more than $1 trillion. According to the ECB official, the "highly volatile" nature of crypto assets made them suitable for gambling and should be treated as such by global lawmakers.

“Due to their limitations, cryptos have not evolved into an innovative and robust form of finance, but rather morphed into a deleterious form of finance,” Panetta said. “The crypto ecosystem is riddled with market failures and negative externalities, and it is bound to face further market disruptions unless appropriate regulatory safeguards are put in place.”

He added:

"Policymakers should be wary of supporting an industry that has so far produced no societal benefits and is increasingly trying to integrate into the mainstream financial system, both to gain legitimacy within of this system and to attach to it."

Panetta asserted that the "security, scalability and decentralization" of crypto transactions were "not achievable", saying that the immutability of blockchains was a negative aspect of the space due to the fact that transactions often could not be undone. He cited the collapse of FTX as well as a recent lawsuit filed by the U.S. Securities and Exchange Commission against Binance as "fundamental flaws" in the ecosystem.

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“Crypto enthusiasts would do well to remember that new technologies do not make financial risk disappear,” 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 full of hot air, it may rise for a while but will eventually burst.

Panetta has previously backed parts of the ECB's plans for a potential digital euro, which are currently being studied by the central bank. He also proposed banning crypto assets with an “excessive ecological footprint” as part of efforts to address environmental risks.

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