ECB Executive Board Member Wants to Regulate Cryptocurrencies as Gambling Due to ‘Speculative Nature’

Following the cryptocurrency market crash of 2022, a member of the European Central Bank (ECB) executive board called for increased oversight of the sector.

Executive Director Fabio Panetta said that investing in cryptocurrencies can be compared to gambling, noting that digital assets are not economically useful, said in a blog post from January 5th.

He stated that following the recent price movement, digital assets, due to their unhedged nature, have a “speculative nature” due to fluctuating value and should be treated as “gambling activities.”

“They serve no socially or economically useful function. They are rarely used for payments and do not finance consumption or investment. As a form of investment, cryptocurrencies lack intrinsic value.”. They are speculative assets. Investors buy them with the sole intention of selling them at a higher price. In reality, they are a gamble disguised as an investment asset.” 

Cryptocurrencies should be regulated like gambling

Panetta further stated that upon receiving regulations the agency should focus more on borrowing some parts from existing gambling laws. At the same time, he emphasized the identification of funds that can be used for criminal activities, such as money laundering, terrorist financing, and sanctions evasion.

“Vulnerable consumers should be protected through policies similar to those recommended by the European Commission on online gambling.”

It is worth noting that the rise in popularity of digital assets has led to calls for regulation due to concerns that the effects could impact the broader financial system. However, due to the minimal impact on the financial system, there have been calls to let the sector “burn out.” However, Panetta said that leaving the sector to its fate may not be the right option, citing the risks associated with the cryptocurrency industry.

The executive board member further called for the need to introduce central bank digital currencies (CBDCs) to counter the influence and impact of private digital assets.

“To build a solid foundation for the digital finance ecosystem, we need a risk-free and reliable digital settlement asset that can only be provided by central bank money. That's why the ECB and central banks around the world are working on central bank digital currencies. By preserving the role of central bank money as the anchor of the payment system, central banks will protect the trust on which private forms of money depend.”

The ECB is among central banks around the world in an advanced stage of exploring a possible CBDC.

It is also worth noting that Europe is also among the global jurisdictions that have advanced the discussion on cryptocurrency regulation. In this regard, the region is working on the introduction of Markets in Crypto Assets (MiCA) legislation.

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All content in this article is for informational purposes only and does not in any way serve as investment advice. Investing in cryptocurrencies, commodities and stocks is very risky and can lead to capital losses.