The ECB blog predicts that virtual assets will go "on the road to irrelevance."
Although the European Central Bank has always cautioned against the use of cryptocurrencies, it now seems that it has issued its most scathing assessment of virtual money yet.
Ulrich Bindsei, Director General of the bank's Market Infrastructure and Payments sector, and Jürgen Schaaf, one of Bindsei's advisors, write in their most recent blog post that the "apparent stabilisation of Bitcoin’s value is likely to be an artificially induced last gasp before the crypto-asset embarks on a road to irrelevance."
According to the pair, Bitcoin "should be treated as neither in regulatory terms and thus should not be legitimized" because it appears to be "neither suitable as a payment system nor as a form of investment."
"Similarly, the financial industry should be wary of the long-term damage of promoting Bitcoin investments – despite short-term profits they could make (even without their skin in the game). The negative impact on customer relations and the reputational damage to the entire industry could be enormous once Bitcoin investors will have made further losses," according to the blog.
VASPs are "animals with whom it is difficult to engage," according to Andrea Enria, chair of the ECB's supervisory board, according to a report from AML Intelligence earlier this month.
VASPs "never think about financial risks,""do not respect national borders, and pose a "huge consumer protection issue," according to Mr. Enria in an interview with the Financial Times.
Christine Lagarde, president of the ECB, issued a warning in May that cryptocurrencies are "worth nothing."
"It is based on nothing… There is no underlying asset to act as an anchor of safety," she continued.
According to Mrs. Lagarde, "I’m concerned about those people who think it’s going to be a reward, who have no understanding of the risks, who will lose it all, and who will be terribly disappointed, which is why I believe that should be regulated."
Earlier this year, Mrs. Lagarde revealed that the amount of Russian rubles being invested in cryptocurrency and stablecoins had increased and expressed concern that crypto service providers would be a "accomplice" to bypassing sanctions against Russia.
By fLEXI tEAM