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A European Central Bank executive board member has levelled a blistering attack on the cryptocurrency market, calling it \u201ca new Wild West\u201d that is \u201cbringing about instability and insecurity\u201d in financial markets and could start a new financial crisis.<\/p>\n
n a speech at New York\u2019s Columbia University, Fabio Panetta likened aspects of crypto investing to those of a Ponzi scheme, saying \u201cit only takes a few to climb high on the ladder \u2013 even if their gains are only temporary \u2013 to convince many others that they are missing out\u201d<\/p>\n
He also said crypto markets now exceed the size of the sub-prime mortgage market that triggered the financial crisis of 2008 and that crypto \u201cshows strikingly similar dynamics\u201d.<\/p>\n
\u201cWe must not repeat the same mistakes by waiting for the bubble to burst, and only then realising how pervasive crypto risk has become in the financial system,\u201d he told the Ivy League audience.<\/p>\n
\u201cAnd while some may hope to be smarter and get out in time, many will be trapped.\u201d<\/p>\n
He went on to assail cryptocurrencies as the domain of unscrupulous actors and criminals that is legitimised by media hype, social media herd mentality and the fear of missing out.<\/p>\n
\u201cThis strong appeal of crypto-assets, especially unbacked ones, is a cause for concern given the lack of fundamentals, the number of recent scandals[13], their use in illegal activities and the high volatility of their prices,\u201d he said.<\/p>\n
\u201cAll this points to unsound underlying market dynamics.\u201d<\/p>\n
He said that crypto-assets like bitcoin could never successfully replace ordinary currencies as money due to their volatility and lack of regulatory supervision.<\/p>\n
He continued by detailing the use of cryptocurrencies as a medium of money laundering and tax evasion by organised crime, terrorism and corrupt governments such as North Korea.<\/p>\n
He called for a coordinated global effort to bring cryptocurrencies to heel by taxing them heavily, subjecting them to intense regulatory scrutiny and by imposing strict transparency requirements.<\/p>\n
He said that unsupervised peer-to-peer transactions would have to end to help secure financial stability, given that more than $3trn was at stake in the market worldwide.<\/p>\n<\/p><\/div>\n