In a paper from European Central Bank (ECB) economists Ulrich Bindseil and Jürgen Schaaf, they argue that Bitcoin’s rise in value disproportionately benefits early adopters at the expense of latecomers and non-holders.
While this doesn’t necessarily reflect the official stance of the ECB, the paper has opened debate over potential regulatory implications.
Bitcoin analyst Tuur Demeester went as far as calling it a “declaration of war” on Bitcoin.
Demeester raised concerns that the ECB might be laying the groundwork for aggressive regulation, including tax hikes and even bans.
War on Bitcoin
The paper claims that, in a scenario where Bitcoin’s price continues to rise, “the existence of Bitcoin impoverishes both 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 “increase their real wealth and consumption” at the expense of those who enter the market later or never at all.
“This new paper is a true declaration of war: the ECB claims that early Bitcoin adopters steal economic value from latecomers,” Demeester tweeted. “I strongly believe authorities will use this luddite argument to enact harsh taxes or bans.”
Demeester went on to argue that they are overlooking Bitcoin’s technological innovation: “Rather than praising Bitcoin as a tech paradigm shift à la petroleum and the internet, the authors … argue that early adopters benefit at the expense of others.”
This is a notable change in tune from the ECB. In 2022, when the price dropped to $16,000, the ECB had all but written off Bitcoin.
At the time, the same authors wrote that Bitcoin was on “an artificially induced last gasp before the road to irrelevance.”
Gloves are off
This latest paper, however, warns that if Bitcoin’s price continues to rise, it could further divide society.
It suggests that governments enact legislation “to prevent Bitcoin prices from rising or to see Bitcoin disappear altogether.”
Demeester concluded, “The gloves are off. It’s clear that these central bank economists now see Bitcoin as an existential threat, to be attacked with any means possible.”
There are already signs that European authorities are ramping up scrutiny of Bitcoin and crypto. Italy recently announced a tax hike on Bitcoin, raising the capital gains tax from 26% to 42%.
The UK government has unveiled partial details of its plan to replace the resident non-domicile (non-dom) tax regime with a four-year Foreign Income and Gains (FIG) system, effective from April 2025,
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