- European Central Bank's head stated Bitcoin should not be legalized.
- The bank’s director general Ulrich Bindseil states that regulation of cryptocurrencies is not equivalent to legalization.
- The blog post from the central bank comes after the FTX exchange filed for bankruptcy on November 11.
The European Central Bank (ECB) detailed its stance on Bitcoin (BTC) and the cryptocurrency ecosystem in a blog post on November 30. In this article, the financial institution outlined the stark differences between regulation of digital assets in Europe and the US and that they should not be legitimized.
FTX implosion and regulators
This development comes after FTX, one of the largest exchanges in the world, imploded and filed for bankruptcy. As a result of the exchange's fallout, many creditors have millions stuck on the platform and are awaiting a decision.
This dark patch in the cryptocurrency ecosystem's timeline has attracted many critics to say, "I told you so." However, cryptocurrency enthusiasts like Changpeng Zhao, the founder of the Binance exchange, remain optimistic and have come together and allocated billions to help the crypto ecosystem.
European Central Bank warns about Bitcoin’s long-term damage to traditional finance
ECB’s Director General Ulrich Bindseil and advisor Jürgen Schaff outlined the negative impacts of cryptocurrencies and how regulators are not on the same page.
Bindseil and his colleagues' criticisms include, the system's high energy consumption, its waste products, and BTC's suitability as a payment system or form of investment.
The blog further adds that since it is neither an effective payment system nor an investment, “it should be treated as neither in regulatory terms and thus should not be legitimised.”
The financial industry should be wary of the long-term damage of promoting Bitcoin investments - despite short-term profits they could make (even without their skin in the game).
Additionally, the duo further outlines the stark difference between how Europe and the US approach the crypto space in terms of regulation. The blog stated,
While the EU has agreed on a comprehensive regulatory package… Congress and the federal authorities in the US have not yet been able to agree on coherent rules.
Bindseil and Schaff add that the current regulation of digital assets is “partly shaped by misconceptions” and the belief that laws should not hinder “innovation.”
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