European Central Bank Exec Wants Unbacked Crypto Treated as Gambling

Fabio Panetta, a Member of the Executive Board of the European Central Bank (ECB) has argued in favor of regulation that recognizes “the speculative nature of unbacked crypto and treat them as gambling activities.”

Panetta believes that “vulnerable” users of unbacked digital assets can be protected through the application of rules similar to the European Commission-recommended principles for online gambling. The ECB executive stated these in a blog post posted on the ECB’s page on Thursday.

The European Commission recommendations of 2014 published in the Official Journal of the European Union (EU) seeks to protect consumers and players of online gambling services. In addition, it seeks to prevent minors from gambling online.

ECB's Fabio Panetta Criticizes Unbacked Crypto Assets

In the post, Panetta described unbacked digital assets as “a gamble disguised as an investment asset,” adding that “they do not perform any socially or economically useful function.”

“As a form of investment, unbacked cryptos lack any intrinsic value, too. They are speculative assets. Investors buy them with the sole objective of selling them on at a higher price,” the ECB executive explained.

Meanwhile, Panetta noted that the European Union’s Regulation on Markets in Crypto-Assets (MiCA) “is an important step” towards cryptocurrency regulation. However, he called for more efforts to regulate other segments of the cryptocurrency industry such as decentralized finance.

Check the recent FMLS22 session on how the market structure of digital assets is changing.

CySEC, MiCA and Crypto Speculation

In October last year, Dr George Theocharides, the Chairman of the Cyprus Securities and Exchange Commission (CySEC) warned against the risks associated with cryptocurrency investments and endorsed MiCA. Moreover, the CySEC boss decried the speculative nature of digital assets in a piece published on the regulator’s website.

“Many crypto-assets have no tangible value – contrary to traditional securities, such as stocks or bonds – resulting in their value and price depending exclusively on supply and demand which in most crypto-assets can be highly speculative. This may lead to high volatility of prices and investors suffering large losses,” the CySEC Chairman wrote.

Meanwhile, Finance Magnates reports that while MiCA seeks to put an end to the ‘crypto wild west’ in Europe, the proposed regulation, when finally passed, must first drive uniformity across Europe’s fragmented digital asset landscape.