In a recent development, the European Central Bank (ECB) has reaffirmed its skeptical stance towards cryptocurrency, particularly Bitcoin, despite the recent approval of spot Bitcoin exchange-traded funds (ETFs) by the United States Securities and Exchange Commission (SEC).
ECB’s Doubts on Bitcoin ETF Approval
Ulrich Bindseil, the Director General of the ECB’s Market Infrastructure and Payments division, along with Jürgen Schaaf, an adviser to the same division, expressed their reservations in a blog post titled “ETF approval for Bitcoin – the naked emperor’s new clothes.” The ECB executives dismissed the notion that the approval of Bitcoin ETFs in the US signifies the safety of BTC investments or validates the recent price rally as “proof of an unstoppable triumph.” According to them, the fair value of Bitcoin remains zero.
Bitcoin’s Failures and Concerns
Referencing their 2022 post on the same blog, Bindseil and Schaaf argued that Bitcoin has not fulfilled its promise of becoming a global decentralized digital currency. They contended that Bitcoin lacks utility as an investment due to its inability to generate cash flow or dividends, its unproductiveness, and its absence of social benefit or subjective appreciation based on outstanding abilities.
Speculative Bubble and ECB’s Vigilance
The ECB executives acknowledged that the expectation of ETF approvals had driven Bitcoin’s price but cautioned that it could be “a flash in the pan.” They highlighted the speculative nature of Bitcoin’s price movements and emphasized the effectiveness of what they termed the “Bitcoin lobby” in perpetuating speculative bubbles.
Furthermore, the ECB stressed the importance of regulatory vigilance in controlling Bitcoin and protecting society from money laundering, cybercrime, financial losses among less educated individuals, and significant environmental damage associated with cryptocurrency mining.
Digital Euro and Banking Crisis Concerns
In a separate column on Feb. 19, ECB executives, including board member Piero Cipollone, addressed concerns regarding the introduction of the digital euro. They countered claims that its implementation could lead to an acute economy-wide banking crisis and asserted that banks are not at risk of losing deposits as a source of refinancing in the long term.
The ECB’s firm stance reflects ongoing skepticism towards the viability and risks associated with cryptocurrency, particularly in the context of regulatory oversight and financial stability.
