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President of the European Central Bank: Bitcoin Cannot be Prohibited

President of the European Central Bank: Bitcoin Cannot be Prohibited

President of the European Central Bank: Bitcoin Cannot be Prohibited

Mario Draghi, the President of the European Central Bank (ECB), the central bank for the euro and administers monetary policy of the eurozone including 19 countries, has stated that it is not in the power of the ECB to prohibit or regulate bitcoin.

At a meeting with members of the Committee on Economic and Monetary Affairs of the European Parliament held earlier this week, Draghi explained that the ECB is not in a position to impose regulatory frameworks on bitcoin and other digital currencies. Indirectly, Draghi stated that bitcoin as a decentralized financial network and peer-to-peer protocol essentially cannot be prohibited or regulated.

As prominent venture capital and the owner of Golden State Warriors, Chamath Palihapitiya, noted at a banking conference hosted by Barclays, central banks and governments are limited in what they can restrict and regulate within the global bitcoin market. Specifically, bitcoin as a peer-to-peer protocol cannot be censored or manipulated. But, businesses and trading activities around bitcoin can be regulated.

“What countries can constrain today is how it [bitcoin] is effectively traded but it cannot be controlled. It is a fundamentally distributed system that exists peer to peer. And so to the extent that you can basically eliminate the will and the actions of every single person in the world, you can eliminate it. But in the absence of that, the genie is fundamentally out of the bottle,” said Palihapitiya.

For bitcoin’s long-term growth, it is positive that an increasing number of governments, financial institutions, and central banks are coming to a realization that bitcoin itself cannot be stopped or restricted in any possible way. More importantly, the majority of central banks are starting to acknowledge that the best method of regulating bitcoin is to provide efficient and realistic regulatory frameworks to prevent bitcoin trading activities and operations from leaving regulated markets.

But, Draghi also noted that he perceives bitcoin as a premature market that is yet to impose significant impact on global markets and real economies. For the most part, Draghi is accurate in that the entire cryptocurrency market is still less liquid than the most liquid stock in the world in Apple. However, that also means that the cryptocurrency market and bitcoin are still in their early stages in terms of development and scaling.Already, despite its relatively small market cap of $65 billion, it has demonstrated its strong potential as an alternative financial network to the global banking system and financial industry.

As of current, many governments including Malaysia, Russia, and India are close to legalizing bitcoin as a payment method. In regions that already have legalized bitcoin such as South Korea, Japan, the Philippines and the US, the price and value of bitcoin are rising at an exponential rate. As the demand from institutional and retail investors also continue to increase at the current rate, bitcoin will soon evolve into a multi-trillion dollar financial network, competing against reserve currencies and traditional assets including gold.

Author : Joseph Young

Joseph Young is a finance and tech journalist based in Hong Kong. He has worked with leading media and news agencies in the technology and finance industries, offering exclusive content, interviews, insights and analysis of cryptocurrencies, innovative and futuristic technologies.

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