The ECB Still Hates Crypto

The European Central Bank (ECB) continues to express skepticism towards cryptocurrencies, undeterred by the recent enthusiasm in the market or the approval of spot Bitcoin exchange-traded funds (ETFs) by the United States Securities and Exchange Commission (SEC).

On February 22, Ulrich Bindseil, the Director General of the ECB’s Market Infrastructure and Payments division, and Jürgen Schaaf, an adviser in the same division, shared their views through a post on the ECB’s official blog titled “ETF approval for Bitcoin – the naked emperor’s new clothes.” In their post, they challenge the notion that the U.S.’s approval of spot Bitcoin ETFs signals that investments in BTC are secure or that Bitcoin’s recent rally is indicative of its enduring success. They assert that Bitcoin’s intrinsic value remains at zero, emphasizing the potential negative impacts of another Bitcoin boom-bust cycle on society, including environmental harm and wealth redistribution disadvantaging the less informed.

The authors reference a previous 2022 blog post where they critiqued Bitcoin’s failure to achieve its initial goal of becoming a global decentralized digital currency. They argue that Bitcoin fails as an investment option, lacking the ability to produce cash flow or dividends, offer productive use, or contribute societal benefits or value based on unique capabilities.

Bindseil and Schaaf acknowledge that anticipation around ETF approvals may have influenced Bitcoin’s price but warn that this could be temporary, dismissing the notion of a “proof-of-price” in a speculative bubble. They attribute the bubble’s reflation to the effectiveness of the Bitcoin advocacy.

The piece concludes with a call for continued vigilance from authorities to protect the public against risks such as money laundering, cybercrime, financial loss, especially among the uninformed, and significant environmental damage.

In a related commentary on February 19, ECB officials, including board member Piero Cipollone, addressed concerns regarding the potential impact of a digital euro on the banking system. They rebutted fears that the introduction of a digital euro might trigger a severe banking crisis or significantly diminish banks’ deposit-based refinancing in the long run.