The European Central Bank (ECB) remains skeptical about cryptocurrencies, maintaining its negative stance despite recent spot Bitcoin exchange-traded fund (ETF) approvals in the United States by the Securities and Exchange Commission (SEC).
ECB’s Official Blog Post Critique
Ulrich Bindseil and Jürgen Schaaf, from the ECB’s Market Infrastructure and Payments division, published a blog post on Feb. 22 titled “ETF approval for Bitcoin – the naked emperor’s new clothes.” In it, they challenge the notion that ETF approval confirms the safety of Bitcoin investments and dismiss the preceding rally as evidence of Bitcoin’s success.
According to Bindseil and Schaaf, Bitcoin’s fair value remains zero, with concerns raised about the potential for societal harm resulting from boom-bust cycles. They highlight environmental damage and wealth redistribution as significant risks associated with Bitcoin’s volatility.
Bitcoin’s Failure to Deliver on Promise
The ECB executives reference a previous blog post from 2022, arguing that Bitcoin has not fulfilled its initial promise of becoming a global decentralized digital currency. They assert that Bitcoin lacks utility as an investment due to its inability to generate cash flow or dividends and its limited productive use.
While acknowledging that ETF approval expectations may have influenced Bitcoin’s price, the ECB remains doubtful, characterizing it as potentially short-lived and speculative rather than a validation of Bitcoin’s value.
Continued Oversight and Protection
The ECB emphasizes the need for ongoing vigilance to address potential risks associated with Bitcoin, including money laundering, cybercrime, financial losses, and environmental concerns. Authorities must remain proactive in safeguarding society from these risks.
on Feb. 19, ECB executives, including board member Piero Cipollone, addressed concerns about the potential negative impact of introducing the digital euro. They refuted claims suggesting it could lead to an economy-wide banking crisis and argued against the notion that banks risk losing deposits as a source of long-term refinancing.
