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ECB Council Member: Regulators Should Treat Crypto Like Gambling

Last year marked a turning point for the cryptocurrency industry. Investors have gone from fear of missing out on strong growth to fear of not getting rid of cryptocurrencies in time. Fabio Panetta, member of the Executive Board of the European Central Bank (ECB), thinks so. Regulators should treat unsecured digital assets as a gamble, he wrote today in a blog titled Unsecured Selling Does Not Apply to Cryptocurrencies.

"TerraUSD, a stablecoin that was stable in name only, was among the first to fall in a chain of collapses that brought down several lending platforms, a hedge fund, a leading cryptocurrency exchange and, most recently, a major cryptocurrency mining firm traded in the United States Of America. More cryptocurrency companies are likely to be added to this list in the coming months".

Troubles began to appear in quick succession. This showed the large share of borrowed money used by players in the cryptocurrency market, their interconnectedness across the cryptocurrency ecosystem, as well as their insufficient management structures. Still, it is remarkable that the crisis in the cryptocurrency market has left the financial system largely unscathed. As a result, many believe it is better to let cryptocurrencies burn than to regulate them and risk being seen as legitimate, Panetta writes.

" First, despite their fundamental flaws, it is not certain that cryptoassets will eventually collapse on their own. Take, for example, unsecured cryptoassets. They serve no socially or economically useful function: they are rarely used for payments and do not finance consumption or investment. As a form of investment, unsecured cryptoassets and any intrinsic value".