The bitcoin-hating European Central Bank isn’t doing much to stop scammers.
FTX co-founder Sam Bankman-Fried was sentenced to 25 years in prison. Apple co-founder Steve Wozniak is gaining traction on YouTube, with his likeness promoting cryptocurrency scams on the site. Crypto fraudsters (or the platforms they use) are increasingly being caught and held accountable for their actions. Cryptocurrency is mainstream, meaning that the main focus on coins, tokens or platforms that seem “too good to be true” is widely perceived to be too good to be true.
Unfortunately, as cryptocurrency gains popularity, more scams appear. And one popular regulatory approach – criticizing Bitcoin (BTC) – only serves to drive more people into the hands of criminals. I have been personally impersonated on social media for dealing with blockchain and the criminals behind it have tried to extort money from my followers and friends. Despite filing police reports and warrants, no progress has been made in arresting him.
There are many problems in cryptocurrency that are good to attack. But from Europe to the United States, regulators are fighting the same straw “bogeyman” of Bitcoin. The recent comments of the European Central Bank serve as an example: “Bitcoin has fallen short of its promise to become a global decentralized digital currency and is still not widely used for legal transactions,” ECB officials Ulrich Bindseil and Jürgen Schaff wrote in a post on the ECB blog. .
Related: Runes protocol sparks new era for Bitcoin after halving
The comments have given rise to many well-worn myths about the “criminality” of Bitcoin. There were many missteps included in the Bindsail and Schaaf post, but six areas were particularly offensive due to the lack of context.
First, the pair argued that the Securities and Exchange Commission's approval of the Bitcoin Spot ETF does not make investing in Bitcoin safer. No investment is completely safe. No asset listed on any European exchange is safer than a Bitcoin ETF, but the legitimacy that comes with the institutional validation is burdened by regulation. The binary critique did not have that context.
European Central Bank (ECB): “Bitcoin's Stripped Emperor Gets New Clothes for ETF Approval.”
Also ECB, fully clothed: pic.twitter.com/4RXIsYXXwd
— Gabor Gurbacs (@gaborgurbacs) February 22, 2024
He also said that Bitcoin's fair value is “zero” because it has not fulfilled its original promise of being a global decentralized digital currency and has failed to meet the criteria of a “productive asset”. This is similar to saying that gold has no fair value because it is no longer used in coins. However, gold still has value. So is Bitcoin. While not used for daily purchases, the scarcity has made it a helpful asset against fiat currencies. What makes the property useful is crucial here, and it's missing.
The authors complain about the pollution caused by Bitcoin mining without proper context. (That's how much electricity is used by the Bitcoin alternative – the European digital banking system?) Similarly, they neglected to mention that Bitcoin miners have greatly adapted their work to renewable energy sources, while other blockchains have reduced energy consumption by 100% by switching to Proof of employment (if not already carbon neutral – or negative).
He also said that Bitcoin should not be trusted because it is used for criminal activities such as money laundering and terrorism. That's sometimes true – this year we saw a British woman arrested for using Bitcoin in part for her role in funneling money to a criminal organization. However, she was arrested due to Bitcoin's transparency. Eight years ago, we proved you could assign identities to thousands of Bitcoin addresses linked to illegal activity. This is especially difficult to do with cash, which remains the primary and preferred method of payment for money laundering, according to the US Treasury Department.
Interestingly, the last two and most misleading claims are the role of regulators in the market. The value of Bitcoin is subject to manipulation, and its market value and price indicate a speculative bubble. Price manipulation is a recurring threat in many markets – the European Commission In 2007 and 2013, it imposed fines of more than 1 billion euros on banks that manipulated the foreign exchange market, and last year a new 3.5 billion dollar case in the United Kingdom for the same foreign exchange manipulation. Nothing like this has been seen with Bitcoin. (Or, if there is, we welcome the ECB and other agencies to act.)
Nobel laureate Robert Shiller, best known for his work on bubbles and market dynamics, argues that speculative bubbles can reflect not only market irrationality but also new technology. In other words, they are characteristics that reflect the market's attempt to value a fictional asset class. Again, this historical and comparative context is missing in Bindseil and Schaff's comments.
Finally, authorities say that the inability to regulate Bitcoin can lead to misconceptions and harm. For that, we point to the EU MCA legislation and several international sandboxes for cryptocurrency exploration. This is simply not true and brings us back to the original issue: approval of the Bitcoin Spot ETF is also a form of regulation.
RELATED: Biden is asking Congress to kill the US bitcoin mining industry.
Is it a coincidence that these comments follow growing inquiries from European users about US Bitcoin ETFs? Or the rise in value of Bitcoin compared to other traditional assets and currencies? No, no. So it stands to reason that any regulator would be playing a different strategy game when choosing these outdated factors without doing their own research.
Ignorance of the sector by regulators choosing to attack Bitcoin over other real targets (a particularly big problem as the European Central Bank is designing a digital euro that should emulate the security and success of an asset like Bitcoin). ); Or is it a deliberate choice to try to protect some consumers and businesses from cryptocurrencies. None of these bring confidence in their technological abilities, but more importantly, neither approach gives their citizens what they need to be vigilant against fraudsters.
Citizens (from consumers to business owners) need a balanced voice from their regulators that gets them where they are: the need to search for digital assets. A regulatory approach that recognizes the innovative appeal of these systems and emphasizes investment risk is more realistic. A presentation that speaks to the potential, challenges and potential obstacles of these new assets, giving consumers a broad perspective to assess whether a YouTube, social media ad or offer from their broker is right for them.
Dismissing an entire sector in an attack on a valuable and solid asset is to use Bitcoin as a hook in a tokenomics-based Ponzi scheme video – misleading.
Dr. Paolo Tasca is Cointelegraph's guest author, professor and economist. He founded two blockchain organizations: the University College London Center for Blockchain Technologies (UCL) and the Distributed Ledger Technology Science Foundation (DSF). Ripple advises a number of organizations including INATBA and the International Organization for Standardization (ISO). . He has also consulted with the United Nations, the European Parliament, FDA Cleveland, the European Central Bank, the central banks of Italy, Chile, Brazil, Colombia and Canada, as well as Nexo. Currencies and P2P Financial Systems by the German Central Bank (Deutsche Bundesbank).
This article is not intended for general information purposes and should not be construed as legal or investment advice. The views, ideas and opinions expressed herein are solely those of the author and do not necessarily represent the views and opinions of Cointelegraph.
