Fabio Panetta, an ECB executive board member, foresees a gloomy future for cryptocurrencies. In his remarks for a panel at the Bank for International Settlements Annual Conference on June 23, he opined that investors’ perception of cryptos as a “robust store of value” had started to diminish by late 2021 and into 2022, when the total market capitalization fell by more than $1 trillion.
The highly volatile nature of digital assets, according to the ECB official, makes them suitable only for gambling, and hence, should be regulated as such by global lawmakers. He pointed at the “market failures and negative externalities” that have plagued the crypto ecosystem and urged policymakers to be wary of supporting an industry that has, so far, brought no societal benefits.
Panetta further mentioned that the “security, scalability and decentralisation” of crypto transactions is not achievable and highlighted the immutability of blockchains as a drawback, given transactions cannot be reversed. He drew attention to the collapse of FTX as well as the SEC’s lawsuit against Binance, citing them as examples of the “fundamental shortcomings” of the ecosystem.
The ECB official also warned crypto enthusiasts that new technology does not make financial risk vanish, “it is like pressing a balloon on one side: it will change in shape until it pops on the other side.” He has previously backed the ECB’s plans for a potential digital euro and proposed banning crypto assets with an “excessive ecological footprint” to address environment-related risks.
