Cryptocurrency users must be protected against online gambling laws according to the European Central Bank (ECB), according to an official post.

All across the globe, crypto regulations and frameworks have been revised, and policies have been altered after the 2022 crash of the crypto industry. The post has explained that the crypto industry needs stringent laws, as per an executive board member of the European Central Bank. 

The ECB executive, Fabio Panetta, has suggested that crypto trading is similar to that gambling; moreover, like gambling, crypto trading has no economic benefits.

The confidence of investors has been shaking after the collapse of major crypto giants like FTX and the spiraling down of others in the market. Therefore, strict laws should be imposed to protect the interest of the investors.

According to Fabio Panetta, crypto investments are “speculative investments,” and digital assets are “unbacked” based on the significantly volatile nature of assets. Further, such assets give rise to illegal activities such as tax evasion, money laundering, and sanction evasion.

He also claimed that the year 2022 revealed and  “marked the unraveling of the crypto market as investors moved from the fear of missing out to the fear of not getting out.”

Gambling laws and crypto laws

According to the ECB executive, crypto regulators can follow the pathway of the present gambling laws. He also explains that there should be provisions to identify, track and tackle illicit activities due to digital assets.

He states that “That is why we cannot afford to leave cryptos unregulated. We need to build guardrails that address regulatory gaps and arbitrage and tackle the significant social costs of cryptos head-on.”

In the future, if strict actions and laws are not implemented, then the financial market will be impacted significantly.  At present, the impact of the crypto industry on the entire traditional financial sector is minimal. This is the reason why the crypto market was allowed to “burn out.” nevertheless, with the speed at which it is expected to grow and with the option of it being allowed to “self-combust,” the industry has the potential to cause bigger issues keeping in mind the risks associated with it.

Flaws that ECB has stated

Due to the decentralized nature of cryptocurrencies and being unbacked by any centralized entity, these assets are speculative. Therefore imposing tax laws similar to that of gambling will help protect the users.

These regulatory efforts have been implemented worldwide, protecting lobbying efforts and further making the crypto industry accountable and responsible.

As crypto assets are prone to various risks, such as IT and cyber attacks, users should be left alone to handle and tackle the risks associated with their assets by themselves. Moreover, digital assets do not have insurance schemes.

As no schemes are available to protect consumer finances, the investment, once lost, cannot be compensated.

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