Crypto Should Not be Seen As a Real Investment: ECB Vice President

Jafrin  |  May 20, 2021

European Central Bank’s (ECB) vice president, Luis de Guindos says crypto investments have weak fundamentals and are not real assets. His comment comes amid huge sell-offs in a wide range of cryptocurrencies.

Cryptocurrencies Have Weak Fundamentals: ECB Vice President

Speaking to Bloomberg TV, the vice president of the European Central Bank (ECB) said that cryptocurrencies should not be seen as a real investment because assessing their value is difficult, adding:

“When you have difficulties to find out what are the real fundamentals of an investment, then what you’re doing is not a real investment.”

His remarks came as the price of Bitcoin and other cryptocurrencies were crashing.

According to him, investors should be braced for more price swings due to the cryptocurrency’s weak fundamentals.

Referring to the flagship cryptocurrency, he said, “This is an asset with very weak fundamentals and that is going to be subject to a lot of volatility.”

Guindos' appearance coincided with the release of the ECB's Financial Stability Report that said the surge in bitcoin prices "has eclipsed previous financial bubbles like the 'tulip mania' and the South Sea Bubble in the 1600s and 1700s."

ECB Appears to Be Dismissive of Bitcoin

Meanwhile, in its Financial Stability Review, the European Central Bank said that the risks posed by Bitcoin to the wider financial system appear to be limited. VP Luis de Guindos said:

"The situation we had some months ago when prices were rocketing is not very different to the one that we have now when prices are moving down."

Recently, ECB Chief Christine Lagarde said that Bitcoin has no intrinsic value and that investors should be prepared to lose all money if investing in cryptocurrencies, adding that certain cryptocurrencies are “prone to money laundering activities.”

Bitcoin has been under pressure recently after Tesla CEO Elon Musk said the electric car manufacturing company would stop taking Bitcoin as payment because of Bitcoin's energy impact on the environment.

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