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Analysts at ECB stress that approval of Bitcoin ETF does not alter the situation

European Central Bank experts continue to question the value of Bitcoin despite the recent approval of spot ETFs, highlighting its shortcomings as a form of payment and investment. They emphasize the need for enhanced regulations to address potential risks.

The recent green light given to spot Bitcoin exchange-traded funds (ETFs) by the U.S. Securities and Exchange Commission (SEC) has not swayed the European Central Bank’s perspective on the cryptocurrency. Ulrich Bindseil, director general of market infrastructure & payments, and Jürgen Schaaf, adviser in market infrastructure & payments, expressed their views in a recent thought-provoking blog post where they reiterated their stance that Bitcoin’s intrinsic value remains zero.

Disputing Bitcoin’s claims of being a global decentralized digital currency and a lucrative financial asset, the analysts highlighted their concerns regarding the potential societal and environmental risks associated with Bitcoin’s reemergence.

The ECB experts pointed out that Bitcoin still has significant limitations as a medium of exchange and an investment vehicle. They emphasized that the cryptocurrency is still considered “inconvenient, slow, and costly.” Despite initiatives like the government backing in El Salvador, Bitcoin has struggled to gain widespread adoption as a “successful means of payment.”

In their analysis, the ECB analysts called for authorities to adopt stricter regulations to mitigate the various risks associated with Bitcoin, including money laundering, cybercrime, financial vulnerabilities, and environmental impact. They stressed that the current price of Bitcoin does not accurately reflect its sustainability or economic fundamentals, advocating for vigilant oversight of the crypto market.

In a significant move in January, the SEC approved the listing of multiple spot Bitcoin ETFs on all registered national exchanges in the U.S., including the Nasdaq, NYSE: The New York Stock Exchange, and Chicago Board Options Exchange, after a prolonged search for these financial products.

Despite the growing interest in cryptocurrencies and innovations in the digital asset space, the skepticism from institutions like the European Central Bank underscores the ongoing debate surrounding the value and viability of Bitcoin as a mainstream form of currency and investment. As the regulatory landscape continues to evolve, it is clear that further discussions and actions will be needed to address the complex challenges posed by the cryptocurrency market.

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