(Bloomberg) -- Crypto-assets that promised radical change in how people pay, save and invest have turned into the “bubble of a generation,” highlighting the need for stricter regulation and risk management, according to European Central Bank Executive Board member Fabio Panetta.

Bitcoin has lost some two-thirds of its value over the past year, rendering true an argument policymakers have long made: products like it are much too volatile to be considered currency. With the broader crypto industry in a tailspin after the recent collapse of FTX, calls are getting louder to find better ways to control it.

“It is now obvious to everyone that the promise of easy crypto-money and high returns was a bubble doomed to burst,” Panetta said Wednesday in a speech in London. “It turns out that crypto-assets are not money. Many are just a new way of gambling.”

He argued that there’s an “urgent need” for regulation to protect consumers from the risks of crypto-assets globally. That includes defining minimum requirements for firms’ risk management and corporate governance, as well as reducing the run and contagion risks of stable coins, he said. Crypto-assets should also be taxed according to their social costs, according to Panetta.

“But regulation will not turn risky instruments into safe money,” he warned. “Instead, a stable digital finance ecosystem requires well-supervised intermediaries and a risk-free and dependable digital settlement asset, which only digital central bank money can provide.”

The ECB is currently exploring the benefits and drawbacks of issuing a digital euro and indicated that it could launch it as early as the middle of this decade.

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