Bitcoin ETF Approval Comparable to 'Naked Emperor’s New Clothes,’ ECB Officials Say

The U.S. SEC’s approval of multiple spot ETFs and the billions of dollars that have poured in since don't make Bitcoin a good investment or a better means of payment, the central bankers said in a blog post.

AccessTimeIconFeb 22, 2024 at 11:39 a.m. UTC
Updated Mar 8, 2024 at 9:58 p.m. UTC
  • The approval of spot bitcoin ETFs and the resulting price rally are not proof that the cryptocurrency is a good investment, two officials at the European Central Bank said in a blog post.
  • Bitcoin’s price may rise in the short term, but there is no “fair value” from which serious forecasts can be made, they wrote.

“Why is this dead cat bouncing so high?”

So asked two officials at the European Central Bank (ECB) about the crypto market’s most recent rally – powered by the approval of bitcoin (BTC) spot exchange-traded funds in the U.S.

The U.S. securities watchdog's approval of multiple funds and the billions of dollars that have poured in since doesn’t change the fact that bitcoin is an all-around lousy investment and clunky means of payment, ECB Director General for Market Infrastructure and Payments Ulrich Bindseil and Advisor Jürgen Schaaf wrote in a Thursday blog post.

“We disagree with both claims and reiterate that the fair value of bitcoin is still zero,” the two officials doubled down on the central bank’s longstanding position that bitcoin is bad, calling the ETF approval for the cryptocurrency “the naked emperor’s new clothes.”

Last year, the European Union became the first major jurisdiction to implement a comprehensive regulatory framework for crypto assets and related service providers. Meanwhile, the ECB has been heads down on building and promoting a digital euro – a trusty central bank-issued currency that could offer a secure alternative to rogue private crypto.

Apart from stating bitcoin’s usual vices, such as high volatility, cost, slow transactions, and high energy use in mining, the central bankers detailed three factors fuelling the current rally.

“The ongoing manipulation of the ‘price’ in an unregulated market without oversight and without fair value, the growing demand for the ‘currency of crime,’ and shortcomings in the authorities’ judgments and measures” will drive the price in the short term, but “there is no fair value from which serious forecasts can be derived,” Bindseil and Schaaf wrote.

Authorities must stay vigilant to protect society when the house of cards eventually collapses, the two warned.

“This job has not been done yet,” they said.

Edited by Parikshit Mishra.


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Sandali Handagama

Sandali Handagama is CoinDesk's deputy managing editor for policy and regulations, EMEA. She does not own any crypto.