A few years ago, central banks were in panic mode about the meteoric rise of bitcoin, litecoin, and the myriad of other cryptocurrencies that were meant to be utilized as a form of money and to take down the fiat system.
They now seem to be confident that it’s merely a speculative investment that will leave behind an immense amount of damage for people who bought in too late.
One of these prominent individuals, who was initially concerned about virtual currencies, is Bank of England (BOE) head Mark Carney.
Speaking in London on Friday, according to Reuters, the central banker averred that cryptocurrencies are failing as money and are nothing more than residing inside of a financial bubble. He does recommend regulators to protect consumers and law enforcement to stop illicit activities.
He doesn’t want a ban, but they need to be reined in, says Carney.
“Cryptocurrencies act as money, at best, only for some people and to a limited extent, and even then only in parallel with the traditional currencies of the users. The short answer is they are failing,” Carney said.
“Crypto-assets raise a host of issues around consumer and investor protection, market integrity, money laundering, terrorism financing, tax evasion, and the circumvention of capital controls and international sanctions.”
For the most part, he explains, cryptocurrencies do not threaten the financial stability of Great Britain. However, he noted, they will impact investors.
“Many cryptocurrencies have exhibited the classic hallmarks of bubbles including new paradigm justifications, broadening retail enthusiasm and extrapolative price expectations reliant in part on finding the greater fool,” Carney stated.
Like other central bankers, media personalities, and billionaire investors, he does see potential in the distributed-ledger technology:
“Even if the current generation is not the answer, it is throwing down the gauntlet to the existing payment systems. These must now evolve to meet the demands of fully reliable, real-time, distributed transactions.”
At the time of this writing, bitcoin is trading at just under $11,000.
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