According to Fabio Panetta, a member of the board of the European Central Bank (ECB), cryptocurrencies have “no societal benefits” and should be viewed as a kind of gambling.Panetta stated that cryptocurrencies like Bitcoin (BTC) and Ethereum (ETH) do not have any useful use in society in a lecture delivered at the Bank for International Settlements (BIS) last week.He also stated categorically that he thinks digital assets lack fundamental worth because they are not supported by any central authority or institution, which further undermines faith in them.
Cryptocurrencies are hence “inherently highly volatile and unsuitable as a means of payment,” Panetta told the audience at the BIS’ 22nd Annual Conference in Basel, Switzerland.
Panetta also compared the dangers of gambling to the characteristics of cryptocurrency.He cautioned that “the very instability of unbacked cryptos does make them appealing as a means of gambling,” and claimed that centralized crypto exchanges had essentially made this possible.Policymakers in all nations should simply recognize this industry as a kind of gambling and subject it to “rigorous regulatory standards” that “address their social cost,” Panetta added, rather than providing support to it.
According to Panetta, if cryptocurrency is not adequately controlled, it may eventually develop to the point where it poses a risk to the stability of the financial system. The ECB leadership said that in order to prevent this, self-custodial wallets and decentralized finance (DeFi) should both be regulated.Although the new MiCA legislation are a significant step in this direction in the EU, he pointed out that more has to be done. Panetta also emphasized that regulating cryptocurrency should not be viewed as a means of legitimizing it.Instead, he suggested using the “same activity, same risk, same regulation” premise, adding that investors must be fully aware of the hazards.