The European Central Bank Said Bitcoin Should Not Be Legitimized

European Central Bank said on Wednesday that Bitcoin was being unreasonably built up and should not be legalized by any regulatory agencies or financial firms, Reuters reported. Bitcoin and other cryptocurrencies, described as an alternative form of cash and protection from the inflationary policies by major central banks such as the European Central Bank in recent years, have fallen 75% over the past year as inflation goes up. In addition, a series of scandals including the collapse of the FTX exchange this month, have finally given central bank officials and regulators irrefutable evidence to fight back. The value of Bitcoin peaked at nearly $69,000 in November 2021, and it fell to and stayed around $17,000 since mid-June 2022. Regulators around the world have been drafting rules for cryptocurrencies, a complex world that includes everything from stablecoins that are supposedly backed by traditional currencies, to forms of lending and borrowing that take place on the blockchain or distributed ledger, which underpins the coins. The ECB’s blog reads “Since Bitcoin appears to be neither suitable as a payment system nor as a form of investment, it should be treated as neither in regulatory terms and thus should be legitimized.” The authors add, “The financial industry should be wary of the long-term damage of promoting bitcoin investments – despite short-term profits they could make.” The ECB’s words carry weight because it is the top regulator of eurozone banks and has a say on the EU’s financial regulation. On Monday, ECB President Christine Lagarde said that the EU’s Markets in Crypto-assets Regulation (MiCA) is being approved at the moment and would likely be expanded into a future version which she addressed as “MiCA 2.”