A new ECB paper claims that bitcoin benefits early adopters at the expense of latecomers. A bitcoin analyst called the ECB's stance a “declaration of war,” warning of potential taxes or bans. Italy recently raised capital gains tax on bitcoin, signaling increased regulatory scrutiny. In Europe.
A new paper from the European Central Bank (ECB) has sparked controversy in the crypto space.
The the paperECB economists Ulrich Bindseil and Jürgen Schaaf have argued that Bitcoin's disproportionate rise in value benefits early adopters at the expense of latecomers and non-holders.
Bitcoin analyst Tuur Demeester calls this a “declaration of war” on Bitcoin.
Demeester expressed concern that the ECB is laying the groundwork for aggressive regulation, including tax hikes and sanctions.
The War on Bitcoin
In a scenario where the price of bitcoin continues to rise, the paper states, “Bitcoin's existence impoverishes non-holders and latecomers” as early bitcoin holders accumulate wealth without contributing to the productive economy.
It describes the situation as a “zero-sum game” where early adopters “maximize their real wealth and consumption” at the expense of later market entrants, or never at all.
“This new paper is a true declaration of war: The ECB claims that early Bitcoin adopters stole economic value from latecomers,” DeMeester said. He tweeted. “I strongly believe that the authorities will use this Luddite argument to enforce stricter taxes or prohibitions.”
Demeister argues that the ECB is ignoring bitcoin's technological innovation: “Rather than hailing bitcoin as a tech paradigm shift a la petroleum and the Internet, the authors … argue that early adopters benefit at the expense of others.”
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This is a marked change in tune from the ECB. In 2022, when the price had fallen to $16,000, the ECB scrapped Bitcoin altogether.
At the time, the same authors wrote that Bitcoin was “artificially induced.” last breath before the road to irrelevance.”
Gloves are off
However, this latest paper warns that if the price of Bitcoin continues to rise, it could further divide society.
It goes so far as to suggest that governments enact legislation to “prevent bitcoin prices from rising or bitcoin to disappear altogether.”
DeMeester concluded, “The gloves are off. It is clear that these central bank economists now see Bitcoin as an existential threat that can be attacked in any way possible.
There are already signs that European authorities are stepping up their scrutiny of Bitcoin and crypto. Italy announced recently Tax hike On Bitcoin, increasing capital gains tax from 26% to 42%.
Crypto market movers
Bitcoin rose 0.1% in the last 24 hours to trade at $68,390. Ethereum was also on the day to trade at $2,645.
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Kyle Baird is News Weekend Editor. Got a tip? Email at [email protected].
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