Panetta (ECB) Defends Unbacked Cryptocurrencies Being Treated Like Gambling


Trading in unbacked cryptocurrencies should be addressed by regulators in a similar way to gambling, says Fabio Panetta, one of the board members, in an opinion piece published in the ‘Financial Times’ Executive of the European Central Bank (ECB).

In his analysis, the Italian claims that unbacked crypto assets “serve no socially or economically useful function” as they are rarely used for payments and do not finance consumption or investment and argues that, as a form of investment, they also They have no intrinsic value.

“They are speculative assets. Investors buy them with the sole objective of selling them at a higher price. In fact, they are a bet disguised as an investment asset,” he says.

In this sense, Panetta considers that, due to their gambling nature, they cannot be expected to disappear on their own, since people have always gambled in many different ways and in the digital age, “it is likely that unbacked cryptocurrencies will continue to be a vehicle for gambling.”

It also warns that the cost to society of an unregulated crypto industry is too high to ignore, while unregulated crypto assets can be used for tax evasion, money laundering, terrorist financing and sanctions evasion, in addition to involving high environmental costs.

“We cannot afford to leave cryptocurrencies unregulated,” says the ECB executive, for whom regulators should treat the trading of unbacked digital assets “like gambling.”

“Regulation must recognize the speculative nature of unsupported cryptocurrencies and treat them as gambling activities,” defends Panetta, for whom it is necessary for consumers to be protected through principles similar to those recommended by the European Commission for gambling online and that are taxed according to the costs they entail for society.

At the same time, the Italian warns that regulation and taxes alone will not be enough to address the shortcomings of cryptocurrencies, which is why he considers a reliable and risk-free digital settlement asset necessary, “which can only be provided for money from the central bank.

“This is why the ECB and central banks around the world are working on retail and wholesale central bank digital currencies,” he says.

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