ECB board memeber calls for cryptocurrency clampdown

Top ECB Policymaker Calls for Cryptocurrency Clampdown

A top European Central Bank (ECB) policymaker, Yves Mersch, recently called for a global effort to clamp down on cryptocurrencies like bitcoin. Mersch, an ECB executive board member, stated that regulators had so far been willing to ignore cryptocurrencies, but added the hype behind them moved it higher on the agenda. This, in turn, translates to a potential cryptocurrency clampdown.

Speaking to Bloomberg TV, Mersch shared that the central bank’s views are in line with those expressed by Agustin Carstens, the head of the Bank for International Settlements. Earlier this week, Carstens revealed he sees bitcoin as a “combination of a bubble, a Ponzi scheme, and an environmental disaster.”

The ECB had in the past disapproved of bitcoin. As covered by Core Media, vice-president Vitor Constancio claimed bitcoin is “certainly not a currency,” while speaking at a press conference in Frankfurt, Germany.

Mersch further added that cryptocurrencies aren’t yet integrated enough into the wider economy to the point they’d cause any major disruption. As such, he noted that the ECB is currently more “concerned about the social and psychological effect they [cryptocurrencies] seem to have.” To Mersh, the money flowing into crypto resembles a gold rush, although to him there is no gold.

Particularly, the ECB executive board member expressed concern over the growth of bitcoin futures contracts. This helps integrate the cryptocurrency with the mainstream financial system. To him, those who wish to “play casino” should be able to, but without affecting the rest of society.

ECB policymaker calls for cryptocurrency clampdown

Furthermore, the ECB policymaker brought up that cryptocurrencies are used for “money laundering and terrorist-financing.” His solution to the problem was to force “the unregulated platforms to report transactions in a harmonized way” so as to grant the ECB access to information.

Mersh then called for a global response against cryptocurrencies, since “some of those virtual currencies have no national base, but rather define themselves as being globalized.” He stressed that any potential effort is at an early stage. Moreover, while speaking at the Official Monetary and Financial Institutions Forum in London, he added that “resolute ring-fencing measures might be needed.”

At the end of his speech, after calling for the cryptocurrency clampdown, he added a positive note, complementing the innovation behind cryptocurrencies. He stated:

“Virtual currencies are not money, nor will they be for the foreseeable future. But just because the initial euphoria and hype subsequently fade, it does not mean that the innovation is without virtue, even if early market leaders may not last the distance.”

Featured image by Photo, Flickr, CC by 2.0