In many respects, this ecosystem has recreated the very shortcomings and vulnerabilities that blockchain technology initially intended to address. Further complicating matters, the crypto market seeks integration into the financial sector for increased relevance and public sector support. This would not provide the basis of a sustainable future for crypto. If anything, it would only heighten contradictions and vulnerabilities, resulting in greater instability and centralisation. The public sector should adopt a determined position by establishing a comprehensive regulatory framework that addresses the social and environmental risks associated with crypto, including the use of unbacked crypto-assets for speculative purposes. It should also resist calls to provide state backing for cryptos, which would essentially socialise crypto risks. The public sector should instead focus its efforts on contributing to the development of reliable digital settlement assets, including through their work on central bank digital currencies. Decisive action of this kind should motivate the crypto ecosystem, including its foundational technology, the blockchain, to realign its objectives towards delivering real economic value within the digital finance landscape. Annexes 23 June 2023 Slides    ENGLISH  1. See Nakamoto, S. (2008), “Bitcoin: A Peer-to-Peer Electronic Cash System”, bitcoin.org. 2. To maintain a system of decentralised consensus on a blockchain, self-interested validators need to be rewarded for recording transactions. In order to achieve sufficiently high rewards, the number of transactions per block needs to be limited. As transactions near this limit, congestion increases the cost of transactions exponentially. See Boissay et al.

Blockchain technology may however be well-suited to other areas, for instance, supply chain management. 10. See S. Shukla (2022), The ‘Blockchain Trilemma’ That’s Holding Back Crypto, The Washington Post, 11 September. 11. As of 14 June bitcoin had a market capitalisation of € billion. Source: CoinGecko. 12. See Gschossmann, I. van der Kraaij, A., Benoit, P-L. and Rocher, E. (2022), “Mining the environment – is climate risk priced into crypto-assets?”, ECB Macroprudential Bulletin, 11 July. 13. Moreover, Makarov and Schoar show that bitcoin mining is highly concentrated: the top 10% of miners control 90% of mining capacity and just 0.1% (about 50 miners) control close to 50% of mining capacity. Alternatively, blockchains based on proof of stake are faster, but also tend towards centralisation, as larger coin holders can reap more rewards, concentrating power and the risk of 51% attacks. See Makarov, I. and Schoar, A. (2022), “Blockchain Analysis of the Bitcoin Market”, NBER Working Papers, No 29396, National Bureau of Economic Research, 18 April. 14. See Soares, X. (2023), “On-Chain vs. Off-Chain Transactions: What’s the Difference?”, CoinDesk, 11 May. 15. See Walch, A. (2018), “Chapter 11 - Open-Source Operational Risk: Should Public Blockchains Serve as Financial Market Infrastructures?”, in Chuen, D.L.K. and Deng, R. (eds. ), Handbook of Blockchain, Digital Finance, and Inclusion, Vol. 2, Academic Press, pp. 243-269. 16. Moreover, the fact that data stored on the blockchain is immutable and transparent may put the technology in conflict with digital privacy rights. 17.