Fabio Panetta, Managing Director of the European Central Bank (ECB), compared cryptocurrencies to the ‘Wild West’ as well as a ‘Ponzi Scheme’ during a speech at the University of Columbia held on April 25.
Harshly criticizing the current rise of the cryptocurrency market, Panetta compared the emerging industry to the archetypal era of the United States, the ‘Wild West’, that is “bringing about instability and insecurity.” He added:
“Crypto-assets are speculative assets that can cause major damage to society. They derive their value mainly from greed, they rely on the greed of others and the hope that the scheme continues unhindered.”
Panetta further pointed out that the size of the present crypto market exceeded the sub-prime mortgage market in 2008, which triggered the global financial crisis. Calling it a bubble waiting to burst, he argued that cryptocurrencies have become a huge risk to the current financial system.
“Now is the time to ensure that crypto-assets are only used within clear, regulated boundaries and for purposes that add value to society,” he noted, adding, “And it is time for policymakers to respond to the people’s growing demand for digital assets and a digital currency by making sovereign money fit for the digital age.”
Panetta recognized that Europe is playing a leading role in cryptocurrency regulation, such as the enactment of the MiCA framework, but said that the current European regulatory measures are not sufficient.