Crypto assets that consume too much energy should be banned outright, according to top European Central Bank official Fabia Panetta.
The central bank has long been wary of cryptocurrencies, criticizing the unchecked private sector that lacks sufficient regulation, and urging the European Parliament, the union’s legislative body, to press on with legislation.
According to Panetta, investors are waddling into what is the “textbook definition of a bubble” and to get there they are being promised ever-rising prices.
This cannot be a sufficient model for the future, the ECB official argued, and seemed to echo other worries about the cryptocurrency sector, calling it a “Wild West” or even a “Ponzi scheme”.
The collapse of FTX has made it apparent that investors who bank on crypto are those who have a soft spot for gambling.
The official’s recommendations to block unbacked crypto assets that are too energy-heavy has important geopolitical timing as the European Union is weening itself off Russian fossil fuels with energy provisions becoming difficult.
“Crypto assets deemed to have an excessive ecological footprint should also be banned”, Panetta said.
Panetta once again reiterated a common criticism against cryptocurrencies, and precisely that those currencies that were not backed by any substantial asset should cease to exist altogether.
The majority of cryptocurrencies that drive market value remain focused on several prominent names in the industry, with the remainder of the currencies mostly moving with the price of those other currencies. Overall, most cryptocurrencies are backed by investors’ belief in them.
The collapse of FTX has triggered a series of unfortunate events which led to some of the biggest companies such as Gemini and Genesis admitting that they were struggling to recoup investments or pay back customers in some cases.
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