Fabio Panetta, a member of the Executive Committee of the European Central Bank (ECB), believes that uncollateralized cryptocurrency assets are vehicles for gambling with no intrinsic value that need to be regulated. In an opinion piece, Panetta notes that while regulating cryptocurrencies is a good answer to the problem, it must also touch on decentralized financial structures. ECB Executive Member Fabio Panetta Believes Crypto Should Be Subjected to Gambling-Like Regulation The issue of cryptocurrency regulation and how it should be applied continues to be a key issue for all regulators worldwide. Fabio Panetta, a member of the Executive Committee of the European Central Bank (ECB), believes that cryptocurrencies masquerading as investment assets are more like...
Fabio Panetta, a member of the Executive Committee of the European Central Bank (ECB), believes that uncollateralized cryptocurrency assets are vehicles for gambling with no intrinsic value that need to be regulated. In an opinion piece, Panetta notes that while regulating cryptocurrencies is a good answer to the problem, it must also touch on decentralized financial structures.
The issue of cryptocurrency regulation and how it should be applied continues to be a key issue for all regulators worldwide. Fabio Panetta, a member of the Executive Committee of the European Central Bank (ECB), believes that cryptocurrencies masquerading as investment assets are more like gambling instruments. As part of an opinion piece published On January 4, Panetta argues that uncovered cryptos should be regulated more like gambling instruments than currencies.
About crypto he said:
They are speculative investments. Investors buy them with the sole aim of reselling them at a higher price. In fact, they are a gamble disguised as an investment.
As gambling elements, these are unlikely to cease to exist if left alone, explains Panetta, even if they lack "intrinsic value" and are rarely used as currency.
The series of negative events in 2022, including the demise of the Terra ecosystem and the bankruptcy of one of the largest crypto exchanges, FTX, is part of what drives Panetta's opinion. For him, the level of interconnectedness that cryptos are now seeing with traditional finance makes it impossible to leave crypto unregulated. Panetta explained:
We cannot afford to leave cryptos unregulated. We must build guardrails that close regulatory gaps and arbitrage and directly address the significant social costs of cryptos.
This upcoming wave of regulation, according to Panetta, must not only view cryptocurrencies as gambling instruments, but also tax them based on “the costs” they impose on society. Panetta delves further into decentralized finance, noting the need for regulation in this sector and mentioning crypto asset lending or non-custodial wallet services. Finally, Panetta supports the creation of central bank digital currencies (CBDCs) to address crypto's shortcomings and preserve the role of central banks.
Europe is currently in the final steps to introduce its own set of rules for cryptocurrencies called MiCA (Markets in Crypto Assets), and it is study issuing a digital version of its fiat currency, the digital euro.
What do you think of ECB President Fabio Panetta's comments? Tell us in the comments section below.
Photo credit: Shutterstock, Pixabay, Wiki Commons, Alexandros Michailidis / Shutterstock.com
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