The cryptocurrency market is booming all of a sudden. It looks to cross $600 billion, it is all over the news, you keep hearing of blockchains every now and then, and you just can’t end a day without someone mentioning Bitcoin. Well yes, the crypto market owes much of its success to bitcoin – the pioneer of digital currencies. Bitcoin is as well making some headlines too, having crossed the 19,000 USD mark and set to hit twenty grand any moment from now. It looks now like governments of nations have no option now than to cope with the reality of the existence of these digital currencies. It’s more like sharing your room with that nuisance of a friend because he has place at the moment but you also can’t kick him also because he’s a friend. There has been much disputes as to whether governments should regulate these cryptocurrencies (particularly Bitcoin) or not. Well, a top German economist shares his views on this.
Is There Really The Need
Clemens Fuest, President of Ifo Institute of Economic Research, says that there are strong reasons as to why the market should have a regulatory framework and not be allowed to function all by itself, under its own “rules”. This, according to him is beyond just ensuring financial stability and compliance to monetary policy. Fuest stated that when it came to transactions that involved cryptocurrencies
“payments can be made with very little or no supervision”
By this, one could deduce that he meant cryptocurrencies could be easily used for evasion of tax by millions of people without any authorities knowing about it or to think of the worst, for supporting illegal activities like terrorism without anyone knowing. With this as his foundation, Fuest summed everything up in this one statement of his
“I think there are strong reasons, beyond monetary policy, to regulate this more closely.”
Weighing The Odds
Clemens’ views on the issue of regulating cryptocurrencies comes at a time when financial institutions are looking to officially integrating cryptocurrency deals into their trades. Deutsche Borse for instance is said to be making arrangements to introduce Bitcoin future contracts. This would make Germany the premier country in the European world to introduce future contracts on a regulated platform. However, many financial regulatory bodies are warning people who are investing in these cryptocurrencies and ICOs about the high risks they put themselves at.
Per a coverage by CCN, council member of the European Central Bank, Ewald Nowotny, says that most bankers and legislators are planning on putting introducing regulations for cryptocurrencies. He said this as at the time Bitcoin was valued at $8,100, and now it sits at $19,000. He also warned that people who are willing to invest in cryptocurrencies should understand that
“it is like buying shares on the bourse [stock market]… people investing in this product can suffer losses and if that happens, they simply have to accept it.”
Joseph Stiglitz has also shared his opinions on cryptocurrencies, saying that bitcoin in particular “ought to be outlawed” because “doesn’t serve any socially useful function.” He even believes that a great bitcoin demise is on its way and that bitcoin would only end up being of absolutely no value. However, not everyone is so “apocalyptic” about the future of bitcoin and crytocurrencies. A cyber security pioneer, John McAfee, recently raised his expectation for bitcoin by the year 2020, saying that it would have made $1 million by then.
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