While some countries and entities are advancing in understanding that cryptocurrencies are investment assets and therefore should be regulated as such, other authorities have different views. The member of the executive board of the European Central Bank (ECB), Fabio Panetta, for example, believes that digital assets are like gambling. Therefore, they should be regulated as “games of chance”. The Italian economist set out his point of view in an article he published in the Financial Times. In the text, Panetta said that although the crypto market crisis in 2022 left the financial system “virtually unscathed”, this sector needs some attention. That’s because he won’t just disappear, “despite his faults”. “People have always played in many different ways. And in the digital age, unbacked cryptocurrencies are likely to remain a vehicle for gambling,” he said. Read also: Indonesia plans to launch national cryptocurrency exchange
Are cryptocurrencies gambling?
The economist stated that unbacked digital assets have no social or useful function from an economic point of view. After all, “they are rarely used for payments and do not finance consumption or investment”. Furthermore, for him, these digital assets lack any intrinsic value as a form of investment. “These are speculative assets. Investors buy them for the sole purpose of selling them at a higher price. In fact, they are a gamble disguised as an investment asset,” he said. Panetta also defended industry regulation, stating that the cost of an unregulated crypto industry is too high. As an example, he cited the billionaire losses that “uninformed investors” had with the collapse of the crypto market. Panetta also noted that the absence of regulation can favor the use of crypto assets for tax evasion, money laundering, terrorist financing and sanctions evasion. “This is why we cannot leave cryptocurrencies unregulated. We have to build safeguards that address regulatory loopholes and arbitration and tackle the significant societal costs of cryptos head-on,” he said. “In addition, regulation must recognize the speculative nature of unbacked cryptocurrencies and treat them as gambling activities.” The ECB member further emphasized that “vulnerable” users should have the same protection as people who gamble online. In addition, they must pay taxes “according to the costs they impose on society”.
ECB member defends central bank digital currency
Finally, the economist stressed that regulation and taxation alone will not be enough to solve the cryptocurrency problem. For him, a “reliable and risk-free digital settlement asset” is needed. In other words, a central bank digital currency (CBDC). “This is why the ECB, and central banks around the world, are working on wholesale and retail central bank digital currencies. By preserving the role of central bank money as the anchor of the payments system, central banks will safeguard the trust they depend on,” he concluded.