Top ECB Official Ramps Up Anti-Crypto Rhetoric, Calls for Global Regulations – Regulation Bitcoin News

Comparing the rise of crypto assets to the gold rush, a top executive at the European Central Bank has urged governments to take action to prevent “a lawless frenzy of risk-taking.” Speaking in the U.S., the ECB official called for a global regulatory clampdown on cryptocurrencies and stepping up efforts to issue central bank digital currencies.

ECB’s Fabio Panetta Lashes Out at Crypto Assets, Says They Fail to Fulfill Promise

One hundred and fifty years after Americans pushed west to find fortune, a growing distrust in banks and technological innovation has led to a new digital gold rush that is beyond the control of state authorities, Fabio Panetta (member of the Executive Board at the European Central Bank) said during a recent speech at Columbia University.

In his speech, which the eurozone’s monetary authority published this week under the title “For a few cryptos more: the Wild West of crypto finance,” the high-ranking ECB official remarked that the cryptocurrency market is now larger than the $1.3 trillion sub-prime mortgage market in 2008, which triggered the last global financial crisis. The dynamics of the cryptocurrency market can be compared to Ponzi schemes, and he said:

The crypto evangelists claim that they can bring heaven to earth by using an illusion of rising crypto asset prices in order to sustain inflows, and the momentum driving the crypto bubble. The appearances of things can deceive. Satoshi Nakamoto’s dream of creating trustworthy money remains just that – a dream.

Panetta continued to claim that crypto transfers can take up to an hour to complete and to highlight the volatility in digital currencies like bitcoin or ether’s prices. He also pointed out that the “supposedly anonymous transactions leave an immutable trail that can be traced.”

According to the banker, most crypto owners rely on intermediaries, which is against the principles of decentralized finance. “Crypto assets are bringing about instability and insecurity – the exact opposite of what they promised. They are creating a new Wild West,” Fabio Panetta added.

Executive of the ECB suggests global efforts to regulate crypto assets

Fabio Panetta is convinced that as speculative assets, cryptocurrencies can cause “major damage to society” when “this house of cards collapses, leaving people buried under their losses.” He warned authorities around the world they should not repeat previous mistakes by waiting for the bubble to burst, before they realize “how pervasive crypto risk has become in the financial system.”

“We need to make coordinated efforts at the global level to bring crypto assets into the regulatory purview,” the ECB official insisted. He suggested regulators ensure that cryptocurrency is subject to the same standards as traditional financial systems. He elaborated:

We will need to make complex trade-offs in order to balance the objectives of innovation, financial stability, and consumer protection. If we are to prevent crypto assets from triggering a legal frenzy of reckless risk-taking, then it is important that we move faster.

The executive stressed, however, this wouldn’t be enough as market growth in the crypto space has revealed an increasing demand for digital assets and instant payments. The public should meet it by helping central banks to engage in digital innovation through the upgrading of wholesale financial infrastructures as well as working with them to issue digital currencies (CBDCs) for central banks.

Panetta said that the European Central Bank leads in these areas. “We are focusing on a digital euro, in order to allow citizens to use sovereign money to make payments anywhere in the euro area, while protecting its role as an anchor for the payment and monetary system,” said the ECB board member who oversees the advance of the digital currency project.

Are you expecting regulators from around the globe to take a global view of crypto markets and assets? Let us know your thoughts in the comment section.

Lubomir Tassav

Lubomir Tassev is a journalist from tech-savvy Eastern Europe who likes Hitchens’s quote: “Being a writer is what I am, rather than what I do.” Besides crypto, blockchain and fintech, international politics and economics are two other sources of inspiration.