The European Central Bank (ECB) recently proposed increased taxation and even banning crypto that harms the environment.
Previously, the EU did not consider banning cryptocurrency mining, even though it acknowledged some of its negative impacts on the environment.
Executive board member of ECB Fabio Panetta proposed that the EU should ban crypto assets that have harmful effects on the environment.
Moreover, Panetta also stated that crypto taxation could account for some of the social costs that some cryptocurrencies have on the environment. These generally include Proof-of-Work (PoW) cryptocurrencies because of the ecological footprint that mining these cryptocurrencies entails.
Panetta also addressed risk concerns regarding cryptocurrencies by referring to the FTX fiasco. According to him, there should be strong regulations regarding risk management, transparency, and investor protection.
ECB officials also addressed decentralization as a risky approach because of the lack of a central authority. But, apparently, ECB fails to understand that decentralization is the sole purpose of cryptocurrencies.
Last but not least, ECB officials said that cryptocurrencies cannot be money. Instead, they refer to the majority of cryptocurrencies as “gambling.”
The EU is currently working on implementing the MiCA bill, which aims to regulate the crypto market in the EU zone.
The MiCA bill could also require crypto firms to address whether their ventures have any impacts on the environment.
The crypto community is not quite happy with the recent statement by ECB officials, understandably so. The crypto industry needs some regulation. But, regulation loses its purpose if it is not done sensibly.