Classic EU: ECB Wants to Regulate Cryptos

The EU is falling behind the US and China in technological innovation as it continues to focus on regulation instead of giving startups and builders a fertile environment.

Balancing Innovation & Regulation

An executive board member of the European Central Bank (ECB) illustrated how the EU wants to become the regulatory leader of cryptocurrencies. 

The Italian economist – Fabio Panetta – held a speech on April 25 at Columbia University, calling for globally coordinated efforts to regulate crypto. Panetta took the opportunity to criticize many aspects of crypto: how transfers can take hours to process, the price volatility, how transactions are not anonymous and leave a trail, how they are used for tax evasion and to circumvent sanctions, and how they can cause massive pollution. While the criticism list grows further, the ECB believes in an all-encompassing solution. Regulation could turn the Wild West back into the promised land. 

“Crypto-assets are bringing about instability and insecurity – the exact opposite of what they promised. They are creating a new Wild West,” said the board member. “At present they derive their value mainly from greed, they rely on the greed of others and the hope that the scheme continues unhindered. We need to make coordinated efforts at the global level to bring crypto-assets into the regulatory purview.”

Some of the criticism is valid and already being addressed by developers across different chains. For example, cryptos can sacrifice decentralization for speed and use more energy-efficient consensus algorithms (or use greener energy sources, for that matter). But the constant focus on regulation instead of innovation seems a bit off. 

6529, a well-regarded crypto influencer and builder of Open Metaverse, wrote an interesting Twitter thread about how the EU should stop resting on its laurels and encourage its citizens to take more innovation risks:

“The EU’s overly conservative position on Web 3 is a subset of its overly conservative position on all tech. The EU is the only other economy in the weight class of the United States and the only economic superpower that also believes deeply in constitutional democracy. It is important that the EU comes along for Web 3 and for a rights-based approach to digital architecture.”

The EU economist argued that regulation can’t stifle innovation as cryptos don’t generate value for the payment system in the first place. He then describes how it fails as a medium of exchange, store of value, and unit of account. The age-old discussion that divides crypto believers from those who have their reservations. The overzealous criticism makes one wonder if the regulatory actions the EU proposes will do much else than stifle innovation. 

Source : bsc.news