Cryptocurrencies are used to evade laws and should face more regulation, according to the general manager of the Bank for International Settlements (BIS). Many digital coins are “used to do some arbitrage, or to circumvent some regulations,” Agustin Carstens said in an interview with CNBC. He added that laws against money laundering and the financing of terrorism were “absent in many applications of some cyber currencies.”
“Cryptocurrencies are being used as a “speculative vehicle.”
Bitcoin and other virtual currencies have seen huge gains over the last year, as investors have looked to diversify their holdings in the coronavirus pandemic. Bitcoin bulls view the token as a sort of “digital gold,” claiming it can act as an inflation hedge in times of economic crisis and massive stimulus. Cryptocurrencies like bitcoin are known for being highly volatile. Carstens said he thinks cryptocurrencies are being used as a “speculative vehicle” and doesn’t see them as a threat to central banks and the established financial system. “I don’t see any dominance of cyber currencies,” he said, adding cryptocurrencies haven’t made “any inroads in terms of working as money.”
Central banks around the world are exploring CBDC.
“Stablecoins also have some limited applications,” BIS general manager said, referring to digital coins that are tied to external assets like the U.S. dollar to minimize price volatility. “They have their own role for very specific purposes. Therefore, I don’t see any challenge from them to sovereign money.” His comments come when various central banks across countries are exploring their own digital currencies. China has led the pack, trialing its digital yuan in a number of cities, while Sweden’s central bank is also considering whether to introduce a digital version of its krona currency as cash usage declines rapidly in the Scandinavian country.