ECB officials say this is ‘Bitcoin’s last stand’

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(Kitco News) – As cryptocurrency markets continued to suffer from the FTX collapse, they were able to take solace in Bitcoin’s relative price stability. But European Central Bank (ECB) officials made it clear on Wednesday that even if BTC maintains its value, they see no future for the flagship cryptocurrency.

“For Bitcoin supporters, the apparent stabilization is a sign of breathing space on the way to new highs,” said Ulrich Bindseil, ECB’s Director General for Market Infrastructure and Payments and Jürgen Schaaf, Senior Advisor to the MIP Directorate at the ECB. blog. “However, this is an artificially generated last gasp before the road to irrelevance.”

Bitcoin was marketed and created as a “global decentralized digital currency,” the authors say. to eliminate the existing monetary and financial system”. But they say bitcoin’s design and technological limitations make it a weak means of payment. “Real Bitcoin transactions are difficult, slow and expensive,” they write. “Bitcoin has never been used significantly for legitimate real-world transactions.”

They are also attacking bitcoin as an appreciating asset. “Bitcoin is also not suitable as an investment. It does not generate cash flow (like real estate) or dividends (like stocks), cannot be used productively (like a commodity) or provide social benefit (like gold),” they write. “Bitcoin’s market price is therefore purely speculative.”

Bindseil and Schaaf characterize bitcoin as a speculative bubble that depends on “waves of new investors” to increase its value. “Big Bitcoin investors have the strongest incentives to perpetuate the euphoria,” they write, adding that big investors “fund lobbyists who press their advice with lawmakers and regulators. The number of crypto lobbyists in the US alone is expected to grow from 115 in 2018 to 320 in 2021. has almost tripled. Their names sometimes read like a ‘who’s who’ of US regulators.”

ECB officials are also criticizing lawmakers who tout the “supposed advantages of Bitcoin” and give the public the impression that cryptocurrencies are an asset class like any other.

“However, the risks of crypto assets are undisputed among regulators,” they write. “In July, the Financial Stability Board (FSB) called for crypto assets and markets to be subject to effective regulation and supervision commensurate with the risks they pose, in line with the ‘same risk, same regulation’ doctrine.”

They lament the slow pace of ratification of cryptocurrency legislation and say that even when laws are in place, enforcement lags behind. They also say that different jurisdictions have different senses of urgency. “While the EU has agreed on a comprehensive regulatory package with the Markets in Crypto Assets Regulation (MICA), Congress and federal authorities in the US have yet to agree on consistent rules.”

ECB officials say part of the problem with regulation is that it is influenced by “misconceptions,” including the belief that “innovation must be allowed at all costs” and that blockchain technology will be transformative simply because it is new.

“First, these technologies have so far produced limited value for society—no matter how great the expectations for the future,” they write. “Secondly, the use of promising technology is not a sufficient condition for the added value of the product based on it.”

They cite “regulatory sanctioning” as the problem because it has convinced the mainstream financial industry to make bitcoin more accessible to their customers. “The entry of financial institutions shows small investors that investments in Bitcoin are sound.”

They also criticize bitcoin for its environmental impact. “One Bitcoin transaction consumes hardware similar to that of two smartphones,” they write. “The entire Bitcoin system creates as much e-waste as the Netherlands.”

“Bitcoin should not be considered for regulation, therefore it should not be legalized, as it does not seem suitable as a payment system or as a form of investment,” they conclude.

It should be noted that the destruction of bitcoin has been predicted many times. According to 99bitcoins’ Bitcoin Obituaries counter, BTC has died 466 times, including twice this month.

Disclaimer: The views expressed in this article are those of the author and may not reflect his views Kitco Metals Inc. The author has made every effort to ensure the accuracy of the information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is for informational purposes only. It is not a requirement to make any exchange for commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article accepts no responsibility for any loss and/or damage resulting from the use of this publication.

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