An executive board member of the European Central Bank (ECB) has called for increased regulation of the sector following the 2022 crash in the cryptocurrency market.
In particular, the executive Fabio Panetta said in a blog post on January 5 that investing in cryptocurrencies could be compared to gambling because digital assets are not economically beneficial.
He asserted that in light of the most recent price movement, digital assets should be viewed as “gambling activities” because of their “speculative nature” and lack of backing.
“They do not perform any socially or economically useful function. They are rarely used for payments and do not fund consumption or investment. As a form of investment, unbacked cryptos lack any intrinsic value, too. They are speculative assets,” he said.
Additionally, Panetta said that the agency should concentrate more on taking a page from the gambling laws already in place when enacting regulations. He also placed a focus on identifying ways that digital assets could be used for other bad deeds like money laundering, supporting terrorism, and evading sanctions.
He continued, “Vulnerable consumers should be protected through guidelines similar to those suggested by the European Commission for online gambling. They should be taxed in accordance with the costs they impose on society.
It is important to note that calls for regulation have arisen as a result of the rise in popularity of crypto assets due to worries about potential effects on the larger financial system. In this instance, there have been calls to let the sector “burn out” due to its small impact on the financial system.
Panetta pointed out the risks associated with the crypto industry in his argument that letting the sector “self-combust” might not be the best course of action.
The push CBDCs
The executive board member further argued that in order to counter the influence and effects of private digital assets, central bank digital currencies (CBDC) must be implemented. Notably, the ECB is one of the global central banks that is far along in its investigation of a potential CBDC.
It is also important to note that Europe is one of the international jurisdictions driving the conversation about cryptocurrency regulation. The region is working to implement the Markets in Crypto Assets (MiCA) legislation in this area.