On April 25, Panetta spoke at Columbia University about the crypto market’s fast rise, claiming that it now has a $1.3 trillion valuation, making it greater than any high-risk sector when the global financial crisis began in 2008. Nonetheless, he claims that they have an impact on state policies and global financial stability.
Panetta, although agrees that crypto assets are not merely speculative and high-risk investments. Fabio Panetta, a member of the European Central Bank’s (ECB) Executive Board, argued for tougher controls on cryptocurrencies to avoid financial “instability and insecurity”.
Panetta concentrated on four key factors in order to get better control over crypto assets:
- Apply the same criteria to them as the rest of the financial system.
- Tax treatment is so lenient, they should be taxed more heavily.
- Enhance public transparency.
- Impose strong transparency criteria and norms for professional operators to follow.
All of this growth, according to Panetta, has been built on speculation and the promise of large and quick profits, “exploiting regulatory loopholes that leave investors vulnerable.”
Panetta has stated that stablecoins pose a risk to countries, a position supported by the European Central Bank, because individuals in charge of minting tokens cannot ensure “redeemability at par at any time” and do not have access to the “permanent facilities” provided by a Central Bank. He went on to say that one-third of the stablecoins established in recent years have failed.
Crypto assets, according to Panetta, cannot achieve their aim of facilitating payments or become a better version of traditional money because of their volatility and lack of sufficient backing. Panetta cited the 60 percent dip in Bitcoin’s price after reaching $68,000, which was more than gold and four times higher than U.S. stocks.
Panetta suggests a higher control in the worldwide regulatory approach due to the increasing development of the global bitcoin ecosystem. He emphasised his concerns about the fact that even governments that have outright banned crypto cannot guarantee that their laws are completely effective.
Fabio Panetta, member of the European Central Bank’s (ECB) Executive Board stated that:
“We need globally coordinated regulatory action to address issues such as the use of crypto-assets in cross-border illicit activities or their environmental footprint. Regulation should balance the risks and benefits so as not to stifle innovation that could stimulate efficiency in payments and broader applications of these technologies”.
As a result, the goal of this new legislation is to preserve people’s money and savings, not to restrict innovation. It would, however, go a long way toward ensuring that central banks maintain their economic power, which they have enjoyed for years.
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