Fabio Panetta, a part of the Executive Board of the European Central Bank (ECB), believes that unbacked crypto assets are merely gambling vehicles with no intrinsic value and should be regulated. In an opinion piece, Panetta explains why cryptocurrency regulation is an effective solution to the problem but should also address decentralized financial structures.
ECB Executive Declares Cryptocurrencies as Gambling Instruments
Regulators around the world continue to debate the topic of cryptocurrency regulation and how it should be implemented. Fabio Panetta, a member of the executive committee at the European Central Bank (ECB), believes that cryptocurrencies masquerading as investment assets are more like gambling instruments. In an opinion piece published on Jan. 4, Panetta states that unbacked crypto assets should not be considered currencies, but rather gambling tools.
On the subject of crypto, he said:
These assets are labeled speculative. Investors buy them solely for the purpose of selling them at higher prices. In essence, they are actually bets disguised as investment assets.
As Panetta explains, even if they don’t have any “intrinsic value” they are rarely used for payment purposes and will likely never cease to exist if left alone.
Decentralized Financial Regulation is Essential
The negative events that occurred in 2022, such as the Terra ecosystem and the bankruptcy at FTX, one of the largest crypto exchanges, are part of what has driven Panetta’s views. Because of the highly interconnected nature of cryptocurrencies with traditional finance, it is impossible to regulate them. Panetta explained:
We cannot afford to let cryptocurrencies go unregulated. We must set up guardrails to address regulatory loopholes, arbitrage, as well as address the serious social effects of cryptocurrency.
This upcoming wave of regulation, according to Panetta, should not only consider cryptocurrency to be a gambling instrument, but also a taxable one. He believes they impose “costs” on society. Additionally, Panetta further noted that decentralized finance needs to be regulated, including crypto asset lending and non-custodial digital wallet services. Lastly, Panetta supports the creation of central bank digital currencies to address the drawbacks of cryptocurrencies and preserve the role of central banks.
Europe is currently in the final stages of implementing its cryptocurrency regulatory framework, referred to as Markets in Crypto Assets (MiCA), as well as exploring the potential of issuing a digital version of its fiat currency, the digital euro.
What do you think of the remarks made by the ECB executive Fabio Panetta? Please share your thoughts in the comments section.
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