In an effort to address financial and social risks, Fabio Panetta, an executive board member of the European Central Bank (ECB), suggested banning crypto assets that have a significant environmental impact.
According to Panetta’s written remarks at the Insight Summit at the London Business School on December 7, harmonizing cryptocurrency taxes across global jurisdictions might help reduce some of the energy and environmental expenses associated with mining and validating.
In the statement, Fabio Panetta said that structural issues have been made worse by the ineffective governance of crypto businesses. He took the example of FTX which showed flagrant deficiencies in investor protection, transparency and disclosure, accounting procedures, and risk management.
Following this event, crypto-assets may move away from centralised to decentralised exchanges, creating new risks owing to the absence of a central governance body.
Last April, Panetta likened crypto finance to the Wild West and warned about the risks stemming from irrational exuberance among investors, negative externalities, and the lack of regulations. As a result, he recommends focusing on protecting inexperienced investors and preserving the stability of the financial system due to its fundamental flaws of being quick to collapse.
In the conclusion, Panetta said that crypto-assets also should be taxed according to their social costs, and digital central bank money is the only one that has the ability to provide well-supervised, risk-free, and dependable digital settlement assets.
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