European Central Bank official says unbacked crypto is similar to gambling

Fabio Panetta, a Member of the Executive Board at the European Central Bank, supports regulation that will recognize the speculative attributes of unbanked cryptocurrencies and treat these assets as gambling activities.

ECB official says unbacked crypto is gambling

According to Panetta, vulnerable users that were relying on unbacked crypto assets could be protected by using rules that are similar to the principles of online gambling that are recommended by the European Commission

The ECB official shared her thoughts on how to regulate unbacked crypto assets in a blog post that was published on the ECB page. She noted that some crypto assets should be regulated using the same guidelines in online gambling.

The European Commission also provided several recommendations for 2014. These recommendations were published in an Official Journal of the European Union, and they plan to protect the players and consumers of online gambling. Moreover, the commission also shares recommendations on how minors can be protected from online gambling.

Panetta further said that unbacked cryptocurrencies should be viewed as a “gamble disguised as investment assets. The executive also added that these assets do not perform any social or economic function that could be useful.

“As a form of investment, unbacked cryptos lack any intrinsic value, too. They are speculative assets. Investors buy them with the sole objective of selling them at a higher price,” the executive said.

Panetta has also said that the EU regulatory framework for crypto assets, known as the Markets in Crypto-Assets (MiCA), was a necessary step toward regulating cryptocurrencies. However, he has called for additional efforts to regulate other areas of the cryptocurrency space, including decentralized finance (DeFi).

Regulators are still concerned about crypto regulations

In October 2022, George Theocharides, the chair of the Cyprus Securities and Exchange Commission (CySEC), warned about the risks of investing in cryptocurrencies. Theocharides also supported the MiCA regulations.

The CySEC boss has also expressed concern about the speculative nature of the crypto market. Cryptocurrency prices are highly volatile, leading investors to speculate on whether these assets will gain or lose value in the short term or the long term.

The CySEC chair also believes that crypto assets do not have any value compared to traditional financial assets such as stocks and bonds. He opined that the value of crypto assets depended on the forces of demand and supply, which raises volatility, and could cause losses to investors.

The EU MiCA regulation has received approval from global regulators. Once the proposed regulation is passed, it could promote uniformity in Europe’s fragmented digital asset space.