Bitcoin is a “funny business” asset that is used for money laundering and needs global regulation, the president of the European Central Bank has said.
Christine Lagarde was unequivocal in her criticism. “For those who had assumed it might turn into a currency — terribly sorry, but this is a highly speculative asset which has conducted some funny business and some interesting and totally reprehensible money-laundering activity,” she said.
“There has to be regulation. This has to be applied and agreed upon . . . at a global level because if there is an escape, that escape will be used.”
Bitcoin’s price has hit record highs in recent weeks. Its value has nearly quadrupled in the past year, reaching a peak of $41,998.75, but has swung wildly amid concern among regulators and feverish investor activity. Bitcoin was up 7.1 per cent on the day at $37,247.67 in New York last night.
Regulators tend to close in on cryptocurrencies and warn of a crackdown when interest peaks, such as during the 2017 bubble.
This week the UK’s Financial Conduct Authority warned investors they could lose everything when buying “cryptoassets” such as bitcoin, saying they “have no inherent value”.
Last week the Treasury opened a consultation on regulation of crypto-assets and stablecoins. John Glen, economic secretary to the Treasury, said they “could pose a range of risks to consumers and, depending on their uptake, to the stability of the financial system”.
However, the government is keen to exploit the “opportunities posed by these innovations”, Mr Glen added.
Ms Lagarde, who was speaking at a Reuters Next online event, did not provide specific examples of money laundering but said there had been criminal investigations into illegal activity. This week German police took down a dark web market where half a million people traded drugs for cryptocurrencies.
By Philip Aldrick, January 14, 2021, published on The Times