Ulrich Bindseil, Director General for Market Infrastructure at the European Central Bank (ECB), and Jürgen Schaaf, an adviser to the ECB, have taken the view, echoing their article published in 2022, that the use of the Bitcoin digital currency, both as a means of payment and as a means of investment, is unsafe and inefficient. This note follows the decision by the US Securities and Exchange Commission (SEC) on 10 January to approve exchange-traded funds (ETFs) for Bitcoin.
The two experts claim that a new cycle of expansion and recession for Bitcoin would be deleterious for the financially poor and for society as a whole, causing significant collateral damage, including to the environment. According to them, the history of Bitcoin is marked by price manipulation and Bitcoin is a preferred vehicle for financing illicit activities, money laundering and ransomware.
Bindseil and Schaaf believe that the fair value of Bitcoin is zero and that Bitcoin has failed to deliver on the promise of becoming a global decentralised digital currency and a financial asset that would continue to increase in value.
The authors also deplore the pressure exerted by lobbyists to legitimise Bitcoin in the eyes of legislators. They believe that Bitcoin should be heavily regulated, or even banned. They refute the fatalism that Bitcoin’s decentralised architecture makes it difficult to supervise: it offers pseudonymity rather than anonymity, with each transaction linked to a unique address on the blockchain.
Furthermore, Bindseil and Schaaf believe that the MiCA regulation governing crypto-assets does not really regulate Bitcoin in the EU and could give the false impression to less informed people that Bitcoin is a safe and regulated asset (see EUROPE 13166/9).
Finally, the authors regret that neither the US nor the EU have so far taken any measures to combat the energy consumption associated with Bitcoin.
Further information: https://aeur.eu/f/ayb (Original version in French by Émilie Vanderhulst)