ECB Recommends Mining Ban and Urgent Stablecoin Regulations

Not surprisingly, central banks want to reduce cryptocurrencies as much as possible, and have advised EU parliamentarians in a recent research treatise.

On July 12th, Patrick Hansen, Crypto Venture Advisor at Presence Capital reportThis mainly focuses on what the ECB considers to be financial risk.

Admitting that the digital asset market is evolving rapidly, he argues that if current trends continue, crypto assets pose a risk to financial stability and need to be “effectively regulated and supervised”. did.

The three areas of concern for central banks were cryptocurrency, decentralized finance and stablecoin climate risk.

The ECB has published three new research articles

• Cryptographic climate risk
• DeFi
• Stablecoin

These give an overview of what the ECB thinks about these issues and include some notable citations and graphs. Some examples 👇 https://t.co/KDO5NC9cqF pic.twitter.com/lSxhLUI5jt

— Patrick Hansen (@paddi_hansen) July 12, 2022

“Probable” mining ban

The first concern is about climate, and the report states that there is a choice between “encouraging cryptographic versions of electric vehicles” or banning fossil fuel versions. This refers to the choice of proof of stake that Ethereum is about to switch to instead of the proof of work running the Bitcoin network.

The ECB states that it is “very unlikely” for public authorities to adopt a hands-off approach.

“There are likely to be policy measures by the authorities (eg disclosure requirements, carbon taxes on crypto transactions or holdings, or a complete ban on the mining industry).”

The next swipe took place on DeFi and the ECB pointed out that most protocols are actually centralized. We used Uniswap as an example to claim that teams, early investors, and whales control Uniswap. “1% of the total token holder’s address holds about 97% of the total token supply.”

In essence, this is exactly what the central bank has tight control over the country’s currency, so this can be considered controversial.

Unstable stablecoin

The next attack was against the ECB’s stablecoin Trying to refuse Since the beginning of 2021, it shows clear examples from the Terra ecosystem and its recent collapse.

“Recent developments have shown that Stablecoin is not stable, with TerraUSD crashes and temporary de-pegging. Tether.. “

The report states that Stablecoin needs to be “urgently brought to the boundaries of regulation,” the EU’s proposal said. MiCA law It needs to be done urgently.

Central banks were unable to compare volatility with the rampant devaluation and instability of fiat currencies due to economic policy. interference And money printing mechanism.

Just this week, the euro has been on par with the US dollar for the first time in almost 20 years.

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

— Clemente (@ WClementeIII) July 11, 2022