Bitcoin is about to get even more scrutiny by regulators, on a global stage.
At least it seems so, if recent comments by European Central Bank President Christine Lagarde are any indication.
As reported by Reuters this week, Lagarde said at a conference sponsored by the newswire that bitcoin should be regulated — worldwide. She pointed to the crypto’s use in criminal activity.
As quoted by Reuters, she termed the cryptocurrency a “highly speculative asset, which has conducted some funny business and some interesting and totally reprehensible money laundering activity.â€� She went on to say that “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.â€�
The comments come against a backdrop where bitcoin’s price action has been volatile — to put it mildly. As of this writing, bitcoin is changing hands at more than $38,000.
Here in the States, and as noted in this space, late last month, the U.S. Treasury Department, through the U.S. Financial Enforcement Crimes Network (FinCEN), proposed a set of new rules that would boost information gathering activities tied to cryptocurrencies. FinCEN, in stats that seem to back up Lagarde’s contention, has estimated that there was $119 billion in suspicious activity in 2019 alone tied to cryptos. The information — tied to who is transacting, where and when — would help uncover such illicit activity. It is the relative anonymity of cryptos that draws criminals to ply their trades.
The rules being proposed in the U.S. — for non-wire transactions above $10,000 and wire transactions above $3,000 — would also apply to “unhosted wallets,� which are held on users’ hardware, including computers or mobile devices, and which can aid in that anonymity (as the wallets are not provided by financial firms).
Digital Fiat LoomsÂ
Lagarde stated back in November that the European Central Bank will be able to launch a digital version of the euro within four years. In a speech, Lagarde said, “If the technology is cheaper, faster, more secure for the users then we should explore it and if it is going to contribute to better monetary sovereignty, a better autonomy for the euro area, I think we should explore it.� She added that “if the technology can facilitate cross border payments, which are very laborious in quite a few corners of our big world, then we should explore it.�
The idea, then, seems to be that digital fiat would be preferable to crypto in the ever-expanding bid to take commerce (particularly commercial commerce) digital.
Coordination across some of the world’s largest economies (specifically, their central banks) may do much to bring central bank digital currencies to the forefront, while increased regulatory scope may push cryptos (those not underpinned by a “peg� such as a currency or other value, and marked by volatility) just a bit to the side (even as companies such as PayPal are opening up the spigots for cryptos to be accepted as payments).
In a nod to such coordination, a recently released report by the Bank for International Settlements (BIS) offers a general framework for digital currencies. Banks offering those foundational principles for the CBDCs included the Bank of Canada, the Bank of England, the Bank of Japan, the European Central Bank, the Federal Reserve, Sveriges Riksbank, the Swiss National Bank and the BIS.
The BIS noted of central bank digital currency (CBDC) that “a CBDC could provide a complementary central bank money to the public, supporting a more resilient and diverse domestic payment system. It might also offer opportunities not possible with cash while supporting innovation.�
As bitcoin gyrates, as speculation reigns, the regulatory gaze tightens, with CBDCs seemingly the digital instrument of choice for regulators and central banks.
Read More On Cryptocurrency:
The post ECB’s Lagarde: Bitcoin Needs More Regulation appeared first on TechFans.