Bitcoin: Martin Lewis gives advice on cryptocurrencies
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The ECB is not a fan of Bitcoin. Its latest attack on the digital currency came last month, when one of the Bank’s executive board members, Frank Elderson, turned up his nose. He wrote on Twitter: “Crypto-assets are volatile.
“They lack any intrinsic value and there is no reliable institution backing them.”
At the beginning of January, the President of the ECB, Christine Lagarde, even announced she wanted to regulate cryptocurrencies.
Ms Lagarde argued the digital currency had been used for money laundering activities in some instances and that any loopholes needed to be closed.
She said in an interview at the Reuters Next conference: “Bitcoin is a highly speculative asset, which has conducted some funny business and some interesting and totally reprehensible money laundering activity.”
The cryptocurrency sector is still mostly lightly overseen or unregulated, although global standards on areas such as anti-money laundering (AML) have emerged.
Ms Lagarde joined a number of regulators from across the world in calling for implementing global rules for cryptocurrencies.
She added: “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.”
While Ms Lagarde did not mention what role the ECB would play in regulating the crypto coins, her comments contradict the ones of his predecessor, Mario Draghi.
The former ECB President, now Italian Prime Minister, said it was not his institution’s job to regulate cryptocurrencies.
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As part of the ECB’s #AskDraghi video series in 2018, many users on Twitter asked if the ECB would regulate or even ban Bitcoin.
He said: “It’s not the ECB’s responsibility to do that.”
Mr Draghi also discussed whether he would recommend purchasing Bitcoin in response to a question from a college student.
He indicated he would think “carefully” about buying Bitcoin, explaining that he does not see it as a currency.
While the euro’s value is stable, he added, “the value of a Bitcoin oscillates wildly”.
Also, hitting out at cryptocurrencies’ decentralised nature, he continued: “The euro is backed by the ECB.
“The dollar is backed by the Federal Reserve. Currencies are backed by the central banks or their governments. Nobody backs Bitcoin.”
It was not the first time Mr Draghi made such comments on cryptocurrencies and their regulation.
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The ECB chief said in September 2017, that the ECB itself had “no power” to regulate Bitcoin, and, in November, he said that cryptocurrencies had a limited impact on the world economy.
In March, though, it emerged that the ECB could be given greater powers on regulation of crypto assets under amendments to the European Commission’s Markets in Crypto Assets (MiCA) framework.
Proposals to grant the ECB powers to give binding opinions on white papers as well as moves towards increased alignment with existing EU financial services regulations are among amendments suggested by European Parliament Rapporteur and MEP Stefan Berger.
The GDF MiCA Working Group has analysed the Rapporteur’s amendments, as it continues to work with the European Parliament and Council as they go through the legislative process.
After reaching a record a few days ago, Bitcoin is dropping, along with other popular cryptocurrencies.
Bitcoin fell 10.1 percent to $54,743.57 (£39,295.76) as of 7.30am in New York on Sunday, after declining as much as 15.1 percent to $51,707.51 (£37,116.43) in the Asian market at the same time.
Online reports attributed the plunge to speculation the US Treasury may crack down on money laundering that is carried out through digital assets.
Express.co.uk does not give financial advice. The journalists who worked on this article do not own Bitcoin.
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