European Central Bank Policy Maker Calls Crypto ‘a Fairy-Tale Story’

A member of the Governing Council of the European Central Bank (ECB) has warned that “the [cryptocurrency] bubble has already started to collapse,” Bloomberg reported Jan. 7.

Speaking at a conference in Riga, Latvia, Ardo Hansson — also the governor of Estonia’s central bank — stated that digital currencies will end up as a “complete load of nonsense.” The official warned that “the bubble has already started to collapse and maybe we should just see how far this collapse goes, and what is left when we’ve reached a new kind of equilibrium.” Hansson added:

“I think we will come back a few years from now and say how could we ever have gotten into this situation where we believed this kind of a fairy-tale story.”

Hansson further reportedly stressed the need to focus on the issue of investor protection in crypto, noting that digital currencies could be used for illegal activities. The central bank governor also emphasized concerns around financial stability, given the increase in links between digital assets and the traditional regulated financial sector.

As previously reported, the ECB policy maker supported criticism from the President of the European Central Bank, Mario Draghi, of the establishment of an Estonian national cryptocurrency, Estcoin. Draghi said at the time that “no member state can introduce its own currency; the currency of the eurozone is the euro.”

In November, Executive Board member of the ECB Benoit Coeure also criticized Bitcoin (BTC), stating that “few remember that Satoshi [Nakamoto] embedded the genesis block with a Times headline from January 2009 about U.K. banks’ bailout. In more ways than one, Bitcoin is the evil spawn of the financial crisis.”

In contrast to Coeure’s statement, European Commission Vice President Valdis Dombrovskis stated in September that the European Union will focus on the development of crypto asset classification and regulatory mapping. Dombrovskis said at the time that crypto assets are “here to stay,” and the crypto market still “continues to grow” despite “recent turbulence.”