ECB’s senior executive proposes a ban on cryptocurrencies
- A senior ECB official has proposed restrictions on tokens with “elevated carbon footprints.”
- According to Fabio Panetta, a senior executive at the European Central Bank, cryptos are “a gamble bet guised as an investment asset.”
Fabio Panetta, a member of the European Central Bank’s executive board, thinks more investors will start switching their crypto assets from centralised to decentralised exchanges as a result of the FTX scandal.
Core challenges with the present state of cryptocurrencies have been outlined by an executive from the European Central Bank that may cause the “bubble” to pop. However, it’s likely that crypto’s function in digital finance will keep developing.
In authored insinuations for the Insight Summit at the London Business School, Panetta stated that a portion of the energy and environmental costs associated with mining and validation of cryptocurrencies could be addressed by harmonising taxation around cryptocurrencies between worldwide jurisdictions. Regarding proof-of-work assets, he added that tokens “considered to have an extreme ecological footprint should also be banned.”
Panetta believes Both the latest insolvency of the top cryptocurrency exchange FTX and 130 associated companies as well as the collapse of TerraUSD, the third-largest stablecoin in the world at the time, ended up taking only just a few days to play out. There is more going on here than just a market collapse. Similar to froth, it is like watching several bubbles pop one after another.
He concluded that “many cryptocurrencies are just a new way of gambling” by equating cryptocurrency with the gambling sector.
In general, it is daunting to see a reason for unbacked crypto-assets to prevail in the financial environment, he continued.
According to the executive, governments around the world must also deal with new revelations about tax dodging and illegal cryptocurrency use.
Implementing the guidelines established by the Financial Action Task Force would help to prevent the use of crypto assets for money laundering and financing terrorism, according to Panetta.
Panetta thinks that because crypto companies lack adequate disclosure and accountability mechanisms, the crypto industry is exposed to a variety of risks.
The ECB wants to standardise the structure for all of Europe and even beyond. The blueprint, according to the bank, will take into account current concerns with the Capital Requirements Directive (CRD) standards when assessing licensing requests for crypto-asset operations and programs.
It’s important to keep in mind that the ECB has previously spoken disparagingly about cryptocurrencies. For instance, in may, ECB President Christine Lagarde took a dig at crypto assets by saying : “I have said all along that the crypto assets are highly speculative, very risky assets, and My very humble assessment is that it is worth nothing. There is no foundation for it, and there are no underlying resources that could serve as a safety net.”