The European Central Bank (ECB) Openly Opposes Proof-of-Work, DeFi And Stablecoins
The European Central Bank (ECB) has released its latest research on cryptocurrencies ahead of more sweeping regulations in the industry.
Restrictions From ECB
It is not surprising that the EU wants to restrict cryptocurrencies as much as possible as the EU legislators have been actively debating the industry in recent years, especially through the passage of the Draft Crypto Law that bans Proof-of-Work is controversial, so far there is no definite answer to the question, although it has been reported that the majority of EU officials do not agree with the ban.
However, things seem to have crossed the boundaries of PoW mining and shifted to broader areas of the market after the EU Commission announced its support for a large-scale ban on stablecoins in May 2022.
Now, on July 12, the ECB officially made public its research on specific risks to the entire cryptocurrency market, signalling a negative outlook for the industry as it begins to suffer. pressure from Europe, which is expected to not be as “strong” with crypto as other countries in the world.
The first concern mentioned by the ECB is related to climate, with the argument that there is a choice between promoting an eco-friendly version of cryptocurrencies or banning fossil fuel coins.
This means that the ECB wants to emphasize the Proof-of-Stake consensus mechanism, which is also the issue that EU lawmakers have emphasized in the “secret” meeting text on the proposal to ban PoW when bringing Ethereum out as an example to refute Bitcoin’s PoW because ETH is about to convert to PoS.
The ECB’s next “reminder” is to the DeFi sector. The bank points out that most DeFi protocols are actually still in a state of centralization, merely taking on a decentralized “shell” on the outside. The ECB used Uniswap as an example, giving the reason why insiders and whales control UNI with only 1% of total token holder addresses but holding about 97% of total UNI stock.
In this detail, we can easily see that the ECB’s view is somewhat similar to that of SEC Chairman Gary Gensler when he himself has been maintaining the stance that the crypto industry is being manipulated “horribly”.
Finally, the ECB ends the report with an “attack” on stablecoins, a topic the bank has been trying to veto since early 2021. However, following the rapid collapse of the Terra ecosystem, the ECB said. :
The ECB frankly insists that stablecoins need to be regulated urgently, in addition to the process of pushing for the completion of the MiCA bill proposed by the EU. In practice, though, the European Central Bank has completely failed to keep the euro in equilibrium against fiat currencies from other countries. Just this week, the euro reached parity with the dollar for the first time in nearly two decades.
Interestingly, in contrast to the Fed’s continuous interest rate hike, the ECB in February 2022 was very confident to keep interest rates unchanged and concluded that Europe is unlikely to experience a sudden increase in inflation like this. the US market is facing.
As a multi-chain development protocol, AAVE will have quite a few advantages when implementing GHO in bulk. However, stablecoin is currently a niche with quite a few big competitors, whether GHO can develop and capture market share no longer needs time to prove. What is your opinion about this move of AAVE? Leave a comment to discuss with us!
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