ECB Highlights its Anti-crypto Stance

The European Central Bank (ECB) has reiterated its opposition to cryptocurrencies despite positive market sentiment, particularly regarding the recent approvals of spot Bitcoin exchange-traded funds (ETFs) by the United States Securities and Exchange Commission (SEC).

Ulrich Bindseil, the Director General of the ECB’s Market Infrastructure and Payments division, and Jürgen Schaaf, an adviser to the same division, authored a blog post on the ECB’s official website on Feb. 22.

The title of the post, "ETF approval for Bitcoin – the naked emperor’s new clothes," succinctly conveys their viewpoint.

In the blog post, the authors challenge the notion that the approval of spot Bitcoin ETFs in the U.S. signifies the safety of BTC investments and validates the recent market surge as "proof of an unstoppable triumph."

According to the bankers, the intrinsic value of Bitcoin remains zero:

“For society, a renewed boom-bust cycle of Bitcoin is a dire perspective. And the collateral damage will be massive, including the environmental damage and the ultimate redistribution of wealth at the expense of the less sophisticated.”

Referring back to their 2022 blog post, Bindseil and Schaaf argue that Bitcoin has not fulfilled its original promise of becoming a global decentralized digital currency.

They assert that Bitcoin lacks the attributes of a viable investment, as it does not generate cash flow or dividends, cannot be used productively, and offers no social utility or inherent value based on exceptional capabilities.

The ECB executives acknowledge that anticipation of ETF approvals contributed to the rise in Bitcoin's price but caution that it could be short-lived:

“There is no “proof-of-price” in a speculative bubble. Instead, a reflation of the speculative bubble shows the effectiveness of the Bitcoin lobby.”

The conclusion emphasizes that the ECB's efforts to regulate Bitcoin are ongoing.

Authorities must remain vigilant and safeguard society against money laundering, cybercrime, financial exploitation of the less informed, and significant environmental harm.

In a separate column on Feb. 19, ECB executives, including board member Piero Cipollone, addressed concerns about the potential introduction of the digital euro triggering a systemic banking crisis and banks losing deposits as a long-term refinancing source.

Sources:

https://cointelegraph.com/news/ecb-not-convinced-etf-approval-us

https://www.ecb.europa.eu/press/blog/date/2024/html/ecb.blog20240222~0929f86e23.en.html