European Central Bank (ECB) executive board member Fabio Panetta believes that the crypto sphere requires adequate regulation after recent crashes and insists that the bubbles won’t end the industry as a whole.
Crypto industry needs urgent regulation
In his keynote speech at the London Business School, Panetta commented on the crypto world’s current state. He described it as “multiple bubbles bursting one after another” and investors in fear of “not getting out.”
The ECB official explained that recent collapses in the crypto industry showed unbelievably poor business and governance practices and proved that finance could not be trustless and stable simultaneously.
Panetta, therefore, called for adequate regulation and taxation of crypto assets. Even stablecoins, which are supposed to keep their value through ties to a pool of assets, are stable in name only and need control, he added.
Current flaws will not end with cryptocurrencies
Panetta further compared crypto to gambling, claiming that the industry will remain popular despite all odds:
“These flaws alone are unlikely to spell the end of cryptos, which will continue to attract investors looking to gamble. Gambling is perhaps the second oldest profession in the world.”
Fabio Panetta, ECB board member
However, the official warned that risky assets cannot be turned into safe money with the help of regulation. He offered to build a stable digital finance ecosystem with well-supervised intermediaries and digital central bank money.
The ECB previously stated that it may introduce a digital euro as early as the middle of this decade and is now examining its advantages and disadvantages.