European Central Bank (ECB) executive board member Fabio Panetta has called for cryptocurrencies to be regulated by principles similar to those recommended for online gambling.
In a blog post on the ECB’s website yesterday (January 5), Panetta talked specifically about ‘unbacked’ crypto assets, and argued that the recent upheaval in the crypto industry heightened the need for regulation.
He said trading unbacked assets was akin to gambling because they lack any “intrinsic value” and are “speculative”. He said investors buy them with the sole objective of selling them on at a higher price.
“Regulation should acknowledge the speculative nature of unbacked cryptos and treat them as gambling activities”, Panetta wrote.
“Vulnerable consumers should be protected through principles like those recommended by the European Commission for online gambling. They should be taxed in accordance with the costs they impose on society.
“To avoid the risk of regulation lagging behind because of the time needed for legislative processes, regulators and supervisors need to be empowered to keep pace with crypto developments.”
Panetta also raised concerns over the use of cryptocurrencies for tax evasion, money laundering, terrorist financing and the circumvention of sanctions. And touched on the environmental costs of unregulated mining activity
Regulation of crypto as a gambling product is not something that has been widely considered by gambling regulators, although the two are understood to be increasing inter-linked.
The Gambling Commission of Great Britain’s CEO Andrew Rhodes made a speech in November, which touched briefly on the emergence of NFTs and crypto as part of the “illegal” or unregulated gambling landscape.
“I’m not going to dwell today on either products based around online illegal gambling sites or emerging products”, he said. “And by emerging products I’m talking about products such as non-fungible tokens – or NFTs – ‘synthetic shares’ and crypto currency, though these things are evolving all the time.”
It is unclear the extent to which blockchain, crypto and NFTs will feature in the UK’s forthcoming gambling regulation reforms. A whitepaper detailing the reformed legislation has been delayed for six months.
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