ECB Official Warns of Multiple Crypto Bubbles Bursting: Regulation Urgently Needed
The European Central Bank (ECB) is raising concerns about the stability of the cryptocurrency market. According to a recent statement, an ECB official says that multiple crypto bubbles are bursting one after another, highlighting the inherent risks within the digital asset space.
European Central Bank (ECB) Executive Board member Fabio Panetta (pictured left) stated on Wednesday that multiple bubbles are bursting one after another across the cryptocurrency landscape. This warning comes after a tumultuous year for crypto investors, who have suffered a series of blows including the collapse of the FTX exchange and the crash of stablecoin TerraUSD. “This is not just...” a fleeting issue, Panetta suggests, emphasizing the potential for wider financial instability.
The crash of TerraUSD, once the world\'s third-largest stablecoin, and the bankruptcy of FTX and its affiliated companies each delivered significant shocks to the market. Global regulators and central banks have been triggered and awakened by the catastrophic fall.
Panetta argues that CRYPTO assets are here to stay, so their regulation is urgently needed to protect investors and the stability of the global financial landscape. He points to the need for \'Trust\' in the financial system and suggests that the crypto crash has served as a cautionary reminder that finance cannot be trustless and stable at the same time.
This call for regulation echoes growing sentiment within the EU. In Europe, given the negative externalities that crypto activities can generate across multiple Member States, the EU should introduce a tax levied on cross-border crypto transactions, according to some policymakers.
Notably, even traditional financial institutions are experimenting with crypto. Hace 1 día Italy\'s biggest bank, Intesa Sanpaolo, opens new tab in January, carried out what CEO Carlo Messina described as a test, by buying 1 million euros in bitcoins, demonstrating the evolving relationship between traditional finance and the crypto world.
The ECB\'s warning underscores the ongoing debate about the future of cryptocurrencies and the urgent need for clear and comprehensive regulations to mitigate risks and protect investors from further market volatility.