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Central banks queueing up to pour doubt on Bitcoin and cryptocurrencies - Crypto Daily™


cryptodaily.co.uk 31 May 2021 11:39, UTC
Reading time: ~2 m

The Irish central bank, in the shape of Derville Rowland, one of the top officials at the bank, was the latest to express concerns over the rise of cryptocurrencies, and investor interest in these alternative assets. The news comes hot on the heels of Japanese central bank governor Haruhiko Kuroda stating that Bitcoin had “extraordinarily high” volatility.

It seems that not a week goes by without a central bank official stating the sentiment that cryptocurrency investors should avoid these assets at all costs. The governor of the Bank of England, Andrew Bailey, recently warned investors not to buy cryptocurrencies “unless they are prepared to lose their money”.

Then last week, Haruhiko Kuroda remarked:

“Most of the trading is speculative and volatility is extraordinarily high,” 

And also:

“It’s barely used as a means of settlement.”

Although not part of a central bank, Jamie Dimon, CEO of the largest US bank JP Morgan, continued his crusade against Bitcoin last week when he warned investors to “stay away” from cryptocurrencies, even as his bank was preparing to offer wealthy clients access to Bitcoin through an actively managed Bitcoin fund.

This leads us to the latest central bank to join the band wagon. Derville Rowland, a high-ranking official, said of cryptocurrencies such as Bitcoin that:

“Crypto assets are quite a speculative, unregulated investment,” and people should be “really aware they could lose the whole of that investment,”

Derville will have a powerful voice in the matter given that she will take over as chairwoman of the European Securities and Markets Authority (ESMA)’s investment management standing committee, a body that has an important say on regulation of the funds industry.

It can certainly be argued that crypto assets do have a highly speculative property at this nascent stage of their growth. Also, regulation should take place which takes into account the innovative nature of cryptocurrencies. 

However, repeated warnings from central banks, and others in the traditional finance sector, for people to stay away from crypto assets, might be seen as a little patronising for investors seeking to protect themselves from the ravages of an extremely poorly managed economy, an environment in which banks have appeared to do rather well.

Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

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