ECB Board Member Urges Regulators To Treat Crypto Like Gambling Activities

Crypto community members are not pleased with the latest blog post from the ECB.

Crypto community members yesterday and today took to Twitter to express their views on a blog post shared by the European Central Bank yesterday.

The cost to society of an unregulated crypto industry is too high to ignore, writes Executive Board member Fabio Panetta in the ECB Blog. Regulators should treat trading in unbacked digital assets as they would gambling activities.https://t.co/VJBQp2TeIk
1/3 pic.twitter.com/f1W0WNqy5x

— European Central Bank (@ecb) January 5, 2023

The article “Caveat emptor does not apply to crypto” is authored by ECB executive board member Fabio Panetta. In it, Panetta describes crypto as an “unbacked” asset with little utility outside speculative investments akin to gambling and illicit activity like money laundering, tax evasion, sanctions evasion, etc. 

Panetta noted that while some regulators may be lulled into believing that there is no need for regulations as the emerging market will eventually fade away, especially in the wake of recent implosions within the industry, he does not believe this to be the case.

“… it is not certain that crypto assets will ultimately self-combust,” Panetta writes. According to the ECB executive, this is because people always have and will always gamble. Consequently, Panetta asserts that people will continue to use crypto as a vehicle for gambling in the foreseeable future.

To this end, Panetta, who described the European Union’s Markets in Crypto-Assets regulation as a start, calls for global regulation of all aspects of the nascent market, including decentralized finance and non-custodial wallets. According to Panetta, regulation should account for the speculative nature of crypto and treat them like gambling. In addition, he calls for high taxation, asserting that it should be proportional to its perceived social harm.

Furthermore, the ECB executive cautioned regulators against giving a listening ear to crypto lobbyists in the formation of regulations.

Meanwhile, Panetta does not stop here. The ECB executive also championed the idea of Central Bank Digital Currencies. Panetta claimed that the innovation would preserve the role of the central bank and the trust on which money depends.

Crypto Twitter Reacts 

The latest post has not gone unnoticed by the crypto community, which unsurprisingly has not taken too kindly to Panetta’s claims.

Cardano founder Charles Hoskinson poked holes at Panetta’s description of crypto as unbacked. In a cheeky response, he questioned the backing of fiat currency, implying there was none.

Trading of unbacked crypto assets? So what backs the euro or dollar? I'll wait for Fabio's answer… https://t.co/rywuEhTldm pic.twitter.com/UCWPjbMhRQ

— Charles Hoskinson (@IOHK_Charles) January 6, 2023

Director of EU strategy and policy at Circle, Patrick Hansen, noted the ECB’s frequent mentions of crypto and Bitcoin. Hansen posited that it was the highest by any central bank.

It's amazing to see how frequently the ECB is publicly engaging on the topic of #crypto & #Bitcoin. Probably more than any other central bank in the world. https://t.co/QCcoFqNJaP

— Patrick Hansen (@paddi_hansen) January 5, 2023

Notably, others pointed out in not-so-gentle words that they believe fiat is the problem, not crypto, lambasting central banks for their monetary policies leading to global record inflation.

Recall that the ECB published an article last November predicting that the end is near for Bitcoin. The article asserting that the asset was on the brink of tumbling to zero cautioned institutions to steer clear of it or risk sullying their reputations.

A February report indicates that the EU will launch a CBDC bill early this year with plans for a full rollout no earlier than 2025. Most crypto community members oppose CBDCs because of the increased oversight it gives governments into citizens’ spending and finances.