ECB board member Fabio Panneta suggests trading unbacked crypto assets should be regulated similarly to gambling

Image: pexels.com

In a blog post, Fabio Panetta, a Member of the Executive Board of the ECB,?describes crypto investments as gambling disguised as an investment asset. Therefore, it should be legally treated as gambling as well.

The executive mentions a chain of crypto-related collapses that highlight “crypto players’ incredibly high leverage, their interconnectedness across the crypto ecosystem and their inadequate governance structures.”

Unlike other regulators who treat crypto as another “bubble” or even scam, Panetta realises the industry is not going anywhere. However, he stresses that crypto is more akin to “a vehicle for gambling” than any solid investment asset.

Therefore, Panetta believes regulators should acknowledge the speculative nature of unbacked cryptos and start treating them as gambling activities. The executive urges legislators to take control over the industry, as “the cost to society of an unregulated crypto industry is too high to ignore.”

In his opinion, legal acknowledgement of the speculative nature of crypto assets would prevent major losses for uninformed investors. Besides, the lack of regulation causes possible negative outcomes of crypto trading. Those include tax evasion, money laundering, terrorist financing and the circumvention of sanctions.

Panetta also highlights the high environmental costs of crypto mining which should be addressed as well.

SEE ALSO:

Indonesia to Create a National Crypto Exchange in 2023

UK Offers Tax Exemption for Foreign Crypto Investors

India Considers Prohibiting Unbacked Crypto Under G20 Presidency