The Bank of International Settlements’ (BIS) head has warned that central banks should be prepared to act against cryptocurrencies, which the head called “a bubble, a Ponzi scheme and an environmental disaster.”
The general manager of the BIS, Agustin Carstens, said that bitcoin raises fears regarding investor and consumer protection.
“Appropriate authorities have a duty to educate and protect investors and consumers, and need to be prepared to act,” said Carstens during his speech in Frankfurt.
Carstens said that digital tokens that are “masquerading as currencies” must not undermine the trust in central banks.
He described bitcoin, the world’s largest cryptocurrency, as “a combination of a bubble, a Ponzi scheme and an environmental disaster,” with his final point in reference to the large amount of energy that it takes to produce the cryptocurrency.
The price of Bitcoin has tanked during the past week, and today, the cryptocurrency fell below $6,000 per coin for the first time since bitcoin surpassed that level in November of last year. The volatile asset has been under pressure since the beginning of the year as the threat of regulatory crackdowns across the globe weigh.
Read more: Price of Bitcoin Dropped Below $6,000
However, according to the former vice president of global risk management at Deutsche Bank, David Coker, the bitcoin market is actually maturing, despite the decline in price and the chorus of “cryptocurrency naysayers.”
Coker stated: “In truth, these events are nothing more than a further sign that the bitcoin market, and cryptocurrencies in general, are maturing; in other words, business as usual and much ado about nothing.”
Coker explained that the decisions that were made by Virgin Money and Lloyds Bank yesterday to ban the credit card purchases of bitcoin and other cryptocurrencies were taken with the view that bitcoin now represents a new asset class, showing characteristics of both currencies and commodities.
“Viewed from this perspective, prohibiting credit card customers from charging their purchases of bitcoin makes good sense and is a sign that the market is adapting to the peculiarities of cryptocurrencies, without the need for top-down regulation,” stated Coker, who currently works as a lecturer at the University of Westminster.