ECB Recommends Mining Ban and Urgent Stablecoin Regulations

It is not surprising that the central bank would like to curb crypto as much as possible, and has provided EU lawmakers with a research paper.

Patrick Hansen (Crypto Venture Advisor at Presight Capital) broke down the report on July 12. The report focused primarily upon what the ECB considers to be financial risks.

It acknowledged the rapid evolution of digital asset markets and stated that crypto-assets could pose financial stability risks if they continue to do so. Therefore, it needed to be “effectively regulated” and “supervised.”

The climate risk of crypto and decentralized finance were three areas of concern to central bankers.

Three new research articles have been published by the ECB.

* Climate risk crypto * DeFi * Stablecoins

These give a great overview of the ECB’s views on these issues, and include some amazing graphs and quotes. Here are some examples.

https://t.co/KDO5NC9cqF pic.twitter.com/lSxhLUI5jt

— Patrick Hansen (@paddi_hansen), July 12, 2022

‘Probable’ Mining Ban

The report stated that the choice is between incentivizing the cryptocurrency version of an electric vehicle or banning its fossil fuel counterpart. This refers the option of proof-of–stake, to which Ethereum is soon to switch, rather than proof-of–work, which runs Bitcoin’s network.

According to the ECB, public authorities are unlikely to adopt a hands-off approach.

“Policy actions by authorities (e.g. Disclosure requirements, carbon tax on crypto transactions and holdings or outright bans are possible.

Next, DeFi was the target of the ECB’s attack. The ECB pointed out that many protocols were actually centralized. It took Uniswap to illustrate its point, claiming that the team, early investors and whales controlled it. “1%” of total token holder addresses holds 97% of total token supply.

This is what a central banking institution does with tight control over a country’s currency.

Stablecoins that are unstable

Next came the attack on stablecoins. The ECB tried to veto them since early 2021. This was evident after the Terra ecosystem collapsed.

Recent developments have shown that stablecoins can be unstable, as demonstrated by the crash in TerraUSD and temporary de-pegging Tether.

According to the report, stablecoins must be “brought into regulatory perimeter with urgency,” and that the EU’s MiCA laws should be implemented immediately.

The central bank did not make the connection between their volatility, the rampant devaluation of fiat currencies and the instability due to economic policy meddling or money printing mechanisms.

This week, the Euro and the USD reached parity for the first times in nearly two decades.

Euro/Dollar parity for the first time since 2003 pic.twitter.com/AUCcPZJSRn

— Will Clemente (@WClementeIII), July 11, 2022

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Marla Brooks

Marla Brooks – Financial Analysis My name is Marla Brooks, and I am the mainstream behind the”observednews.com”  for the powerful and most delicate insights into the latest activities in the financial analysis category. I started my journey as an independent financial consultant. I had approximately nine years of experience in this field. I am free soul so; my passion for exploring the world has taken me to the nations across the globe and given me the chance to report for a portion of the best news associations. Currently, I am a full-time editor as experienced in finance and started to use my abilities.

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