European Central Bank’s Inaction Against Bitcoin Scammers

Sam Bankman-Fried, co-founder of FTX, has been sentenced to 25 years in jail, while Steve Wozniak, co-founder of Apple, has won an appeal against YouTube for the unauthorized use of his likeness in cryptocurrency scam promotions on the platform. It is becoming more common for crypto scammers, or the platforms they use, to be caught and held accountable for their actions. As cryptocurrency gains popularity, more scams are likely to emerge. Unfortunately, a regulatory approach that involves criticizing Bitcoin is only leading more people into the hands of criminals.

The European Central Bank recently made comments criticizing Bitcoin, claiming that it has failed as a global decentralized digital currency and is hardly used for legitimate transfers. These criticisms are based on debunked myths about Bitcoin’s criminality. The ECB’s remarks lack context and contain several offensive claims.

The ECB duo claimed that the approval of Bitcoin spot ETFs by the Security and Exchange Commission would not make investing in Bitcoin safe. No investment is entirely safe, and institutional validation through regulation enhances the legitimacy of Bitcoin as an asset. They also argued that Bitcoin has no fair value because it didn’t fulfill its original promise of being a global currency. Similar to gold, Bitcoin still has value and serves as an inflation hedge against fiat currencies.

The authors of the post also complained about the alleged pollution caused by Bitcoin mining without providing the appropriate context. They failed to mention that Bitcoin miners have shifted to renewable energy sources and made efforts to reduce energy consumption. They criticized Bitcoin for being used in criminal activities such as money laundering and terrorism. While this is sometimes true, Bitcoin’s transparency actually aids in catching criminals, and cash remains the preferred means of payment for money laundering.

The authors made misleading claims about Bitcoin’s susceptibility to price manipulation and the existence of a speculative bubble. Price manipulation is a concern in many markets, but there is no evidence of such manipulation in Bitcoin. Nobel Laureate Robert Shiller argues that speculative bubbles can reflect attempts to price a new technology accurately. The authors also claimed that authorities have failed to regulate Bitcoin, which is not true considering the existence of regulations like the European Union’s MiCA law.

Regulators who choose to attack Bitcoin instead of addressing other valid concerns are either ignorant about the sector or intentionally trying to keep consumers and businesses away from cryptocurrencies. Such a regulatory approach undermines confidence in their technological abilities and fails to protect citizens from scammers. A more realistic approach is to acknowledge the potential and challenges of digital assets, providing consumers with the necessary information to make informed decisions.

Dismissing the entire cryptocurrency sector based on criticisms of Bitcoin is misleading and counterproductive. Regulators should take a balanced approach that recognizes the innovation of these systems while addressing investment risks. By providing comprehensive information, regulators can empower consumers to evaluate the suitability of different offerings and protect themselves against scams.