An ECB executive has slammed crypto trading calling the €1.7 trillion industry a 'Ponzi scheme'

A top European Central Bank (ECB) official dubbed cryptocurrency "Ponzi schemes" and asked for a crackdown to avoid a "lawless frenzy of risk-taking."

Franco Panetta, an Executive Board member who heads the ECB's work on the digital euro, has called for a global concerted effort to bring crypto-assets within government regulatory jurisdiction by strengthening money-laundering regulations and enhancing disclosure measures in a fast-moving market.

The ECB has previously criticized cryptocurrencies, but Mr Panetta's remarks signal an escalation of the ECB's fight against such assets as bitcoin and Ethereum, which have grown in popularity in recent years and are now valued more than $1.8 trillion (€1.7 trillion) combined.

Mr Panetta said: “Crypto assets are speculative assets that can cause major damage to society.”

He observed that while crypto assets account for just 1% of total world assets, they have become larger than the market for US subprime mortgages in 2008, when their collapse precipitated a financial catastrophe, according to the Financial Times.

He said, “We must not wait for the bubble to burst and only then realise how pervasive crypto risk has become in the financial system.”

“Like in a Ponzi scheme, such dynamics can only continue as long as a growing number of investors believe that prices will continue to increase and there can be fiat value unbacked by any stream of revenue or guarantee,” he added.

Mr Panetta revealed there could be a case for high taxation of some crypto assets, “above and beyond the taxation of other financial instruments.” 

According to the Financial Times, Bitcoin's price has dropped from $69,500 (€65,500) in November to little under $40,500 (€37,500) on Monday.