European Central Bank (ECB) chief Mario Draghi says that bitcoin and other cryptocurrencies are not mature enough for regulation.
As reported by CNBC, the ECB president made these comments during a recent press conference, stating that the bank is cautiously observing the development of bitcoin and other fintech products. He explained that innovation should be “cherished for its potential benefits” but also “critically assessed” for risks.
However, Draghi says that, at present, cryptocurrency technology is still too immature to warrant official ECB analysis and regulation:
“With anything that’s new, people have great expectations and also great uncertainty. Right now we think that especially as far as bitcoins and cryptocurrencies are concerned, we don’t think the technology is mature for our consideration,” Draghi said.
This is a slightly different tone for Draghi, who last month told the European Parliament’s Committee on Economic and Monetary Affairs that the ECB did not even have the authority to regulate cryptocurrencies. “Certainly it’s not within our powers to prohibit or to do something of the nature…or to regulate” bitcoin,” he said at the time.
However, defying the bombastic claims of bitcoin skeptics like Jamie Dimon, the bitcoin price continues to scale the charts. On Friday, it surpassed $6,000 to set a new all-time high — just one week after piercing the $5,000 mark for the first time. This meteoric advance highlights bitcoin’s potential threats to central banks across the globe, several of whom have signaled their intention to institute clampdowns on cryptocurrency trading and mining, even as they plot ways to co-opt blockchain technology for their own purposes.
Draghi’s present statement is an even greater shift from comments he made in July, in which he said that there is “no evidence to suggest that the connection of [digital currencies] to the real economy has strengthened significantly.”
Now, however, he says that, like any fintech innovation, bitcoin must be “embraced with lots of attention to its potential risks” to avoid a financial crisis.
“One of the lessons of the great financial crisis is that financial innovation, in this case it’s financial and technology innovation… should be embraced with lots of attention to its potential risks,” Draghi concluded.
So while Draghi and other central bankers may continue to deride bitcoin as immature, and entrenched financiers like Dimon may call it a fraud, they can no longer deny that it has become part of the mainstream economic conversation.
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Last modified: May 21, 2020 9:11 AM UTC