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European Central Bank (ECB) executive board member Fabio Panetta has been a vocal supporter of central bank digital currency (CBDC) and cryptocurrency sceptic, and he presented his latest argument for CBDC on Jan. 5. Speaking on the ECB's official blog, he said that by developing CBDCs, central banks will "protect the confidence ultimately held by private forms of money."
Panetta started her argument with a severe crypto-currency valuation in 2022. "Last year marked the unraveling of the cryptography market as investors shifted from fear of failure to fear of not going out," he said.
This comment served as a transition to an examination of the position that cryptocurrency should be left alone to "burn instead of regulating at the risk of legitimizing cryptos." However, he is a man of straw who is immediately slaughtered:
"Firstly, despite their fundamental flaws, there is no certainty that crypto assets will eventually protect themselves."
Secondly, "the societal cost of an unregulated crypto industry is too high to ignore," particularly for "uninformed investors." Panetta went on to mention money laundering and damage to the environment, and made a mockery of the blogpost style:
"Cryptos aren't the only thing burned."
Having established the necessity of regulation, Panetta suggested that the European Union’s Markets in Crypto Assets (MiCA) legislation was an important step, but insufficient in regard to crypto asset lending or non-custodial wallet services. Furthermore, 'unbacked cryptos [...] should be taxed according to the costs they impose on the company,' said Panetta. His solution:
“Trading in unbacked digital assets should be treated by regulators like gambling.”
Its solution: "Trading non-marketed digital assets should be treated by regulatory agencies as gambling."
It's amazing to see how frequently the ECB is publicly engaging on the topic of #crypto & #Bitcoin. Probably more than any of the world's central banks. https://t.co/QCcoFqNJaP
— Patrick Hansen (@paddi_hansen) Https://t.co/QCcoFqNJaP— Patrick Hansen (@paddi_hansen)
Even with taxation and regulation, crypto will have shortcomings, Panetta argued. Even with the tax and regulatory, crypto will have gaps, Panetta pointed out. "a safe and reliable digital settlement asset," and maintaining the central bank's role, confidence in the cryptocurrency will be safeguarded, he concluded.
Related: ECB should have DLT wholesale settlements when the market wants it, official says
The ECB blog caught the eye of the crypto community Nov. 30 with an entry titled “Bitcoin’s Last Stand.” Panetta has previously proposed banning crypto assets that have significant environmental impact.
