Fabio Panetta (a member of the European Central Bank Executive Board) has called for more oversight in the face of controversy and crises that have rocked the cryptocurrency trading industry.
Panetta argued in a blog posted today by the ECB that the recent developments have made it more important to regulate cryptocurrency in a variety of ways.
He stated with significance that unbacked cryptocurrency – whose value is not supported in any way by supply or demand but by the price of its backing asset – has a speculative nature due to fluctuations in value and should therefore be considered ‘gambling activities.
He explained that unbacked cryptos are not an investment form and have no intrinsic value. They are speculation assets. They are speculative assets that investors buy with the intention of selling at a higher value. They are actually a gambling asset span>
He added that vulnerable consumers need to be protected by principles comparable to the European Commission’s for online gambling. These individuals should be taxed according to the social costs they cause .”
As with the gaming and betting industries, crypto is in rapid development. Fanetta believes regulators need to act fast to keep up.
He argued in particular that regulators should address the use of cryptocurrencies for money laundering and terrorist financing, as well the risk to investors of huge sums of cash being lost.
There are no new calls for cryptocurrency regulation and considerations of crypto-based products within existing gambling laws.
They have actually been increasing over the last year, as both the former and the latter sectors continued to grow.
The UK Gambling Commission (UKGC), for example, has stated on multiple occasions that it intends to consider ‘new and emerging products’ such as NFTs in its review of the UK Gambling Act White Paper.
Both sectors are becoming increasingly intertwined. According to SOFTSWISS, crypto accounting accounted for large numbers of bet stakes in 2017, but at a lower level, than previous years. This could lead to increased regulation.
SBC found that the crypto-betting industry is not affected by the events like the collapse of FTX. This caused considerable turmoil across crypto-markets. Varun Sudhakar, CEO BetDEX, was confident about the market prospects during a November interview.
Panneta says that last year’s crypto-related failures ‘occurred quickly’. This is due to crypto players’ high leverage and interconnectedness within the crypto ecosystem. A tougher regulatory outlook may be necessary.
