An executive board member of the European Central Bank (ECB), Fabio Panetta, has criticized cryptocurrencies as deleterious and unsuitable for finance. He noted that the highly volatile nature of crypto assets made them suitable only for gambling and that their perception as a robust store of value was dissipating. He also claimed that the security, scalability, and decentralization of crypto transactions were unachievable, and the immutability of blockchains resulted in negative aspects of the space due to transactions being unable to be reversed.
Panetta highlighted the collapse of FTX and a lawsuit brought by the United States Securities and Exchange Commission against Binance as fundamental shortcomings of the ecosystem. He suggested that crypto enthusiasts should be cautious because new technology does not make financial risk disappear. Furthermore, he proposed banning crypto assets with an excessive ecological footprint as part of efforts to address risks to the environment.
Panetta’s critical remarks came in written remarks for a panel at the Bank for International Settlements Annual Conference. He urged global lawmakers to treat digital assets as gambling and warned that the crypto ecosystem was riddled with market failures and negative externalities. Panetta added that the industry had so far produced no societal benefits and was increasingly trying to integrate into the traditional financial system, both to acquire legitimacy as part of that system and to piggyback on it.
Title: ECB official labels crypto as ‘deleterious’ with ‘no societal benefits’ in scathing speech
An executive board member of the European Central Bank (ECB), has suggested a dark future for cryptocurrencies, in which the digital assets may be used for little more than gambling among investors.
Panetta claimed the “security, scalability and decentralisation” of crypto transactions was “not achievable”, saying the immutability of blockchains as a negative aspect of the space due to transactions often being unable to be reversed.
The ECB official’s assessment is a significant blow to the crypto industry as a whole. The negative perception of cryptocurrencies could lead to increased regulatory scrutiny and possibly result in more stringent measures. However, some experts argue that the criticisms leveled by Panetta are not entirely accurate, and many cryptocurrencies have real-world use cases that cannot be dismissed.