European Central Bank (ECB) officials stand firm on their assessment that Bitcoin holds no inherent value, despite its recent surge beyond $50,000 propelled by the introduction of multiple exchange-traded funds (ETFs) in the United States.
In a blog post dated Feb. 22, Ulrich Bindseil and Jürgen Schaaf emphasized that approving ETFs does not alter Bitcoin’s unsuitability as either a medium of exchange or an investment vehicle.
The post refuted claims by Bitcoin proponents that the ETF approval validated the asset’s safety and that the subsequent price surge was evidence of its legitimacy. Instead, the ECB officials likened the recent price rally to a “dead cat bouncing” and the ETF approval to “the naked emperor’s new clothes.”
The ECB officials further expressed concerns about the societal implications of Bitcoin’s volatile price cycles, highlighting potential environmental damage and wealth redistribution, particularly disadvantaging less-informed investors.
Moreover, the authors attributed Bitcoin’s sustained price performance to market manipulation, the currency’s appeal in criminal activities, and regulatory inadequacies.
It should be noted that the ECB does not officially endorse the opinions presented in the blog post. However, both authors hold significant roles within the central bank—Bindseil serves as the ECB’s Director General of market infrastructure and payments. Schaaf is an advisor in the same division.
Questions ETF approval rationale
ECB officials have criticized the approval of ETFs, labeling it a “misjudgment by authorities” due to the recognized lack of positive social benefits associated with Bitcoin.
According to them, US and European legislators have hesitated to establish concrete regulations, citing the abstract nature of guidelines and concerns over Bitcoin’s deviation from traditional financial assets. However, pressure from well-funded lobbyists and social media campaigns has led to recent compromises.
Despite these developments, the officials argued that neither the United States nor the EU has effectively addressed Bitcoin’s substantial energy consumption and negative environmental impact. They also pointed out that the decentralized nature of Bitcoin poses challenges for authorities, often resulting in regulatory inertia.
“It seems wrong that Bitcoin should not be subject to strong regulatory intervention, up to practically forbidding it,” they wrote.
In conclusion, the authors emphasized the importance of vigilance by authorities to safeguard society against issues such as money laundering and other crypto-related crimes.
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