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ECB Recommended A Mining Ban And Stablecoin Regulations Urgently

ECB recommended a mining ban and a regulation for stablecoins as urgently as possible, releasing its findings on the crypto industry before the implementation of regulations across the region so let’s read more today in our cryptocurrency news. It comes as no surprise that the ECB wants to curtail crypto as much as it can […]

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ECB recommended a mining ban and a regulation for stablecoins as urgently as possible, releasing its findings on the crypto industry before the implementation of regulations across the region so let’s read more today in our cryptocurrency news.
It comes as no surprise that the ECB wants to curtail crypto as much as it can which was followed by advice from lawmakers and a new research paper. The crypto venture advisor at Presight Capital Patrick Hansen said the report mainly focused on what the ECB considers financial risk. It acknowledged that the digital assets markets are evolving fast and claimed that if current trends continue, these crypto assets will pose a huge risk to financial stability which is why they need to be supervised. The three areas of concern for the bankers were the climate risk of crypto and stablecoins.

The ECB has published 3 new research articles on
• Climate risk of crypto• DeFi• Stablecoins
They give a good overview of how the ECB thinks about these issues and contain some remarkable quotes and graphs. A few examples https://t.co/KDO5NC9cqF pic.twitter.com/lSxhLUI5jt
— Patrick Hansen (@paddi_hansen) July 12, 2022

The first concern was one about the climate with the report stating that there’s a choice between incentivizing the crypto version of an electric vehicle or simply banning the fossil fuel version which refers to the choice of PoS vs PoW. The ECB stated that the authorities are highly unlikely to take their hands-off approach:
“Policy action by authorities (e.g. disclosure requirements, carbon tax on crypto transactions or holdings, or outright bans on mining) is probable.”
The ECB recommended a mining ban and it also took a swipe at Defi as it pointed out that most protocols were centralized. It used Uniswap as an example claiming the team and the whales control 1% of the total token holder addresses and they hold 97% of the total token supply. This is precisely what the bank does with control over a nation’s currency. The next attack was on stablecoins which the ECB was trying to veto since 2021 and made the example out of tErra:
“Recent developments show that stablecoins are anything but stable, as exemplified by the crash of TerraUSD and the temporary de-pegging of Tether.”

Euro/Dollar parity for the first time since 2003 pic.twitter.com/AUCcPZJSRn
— Will Clemente (@WClementeIII) July 11, 2022

The report stated that the stablecoins have to be brought into the regulatory perimeter with urgency adding that the EU proposed MiCA laws have to be implemented right away. The ECB however fails to make a comparison between volatility and devaluation as well as instability of fiat currencies beucase of the economic policy meddling and money printing mechanisms.