Banks Crackdown on Bitcoin

Agustín CarstensThe price of Bitcoin (BTC/USD) has been extremely volatile as it sinks lower and lower.

This happened during trading on Tuesday as the cryptocurrency shed 14 percent to $5,920 before bouncing back to $7,265. This is up six percent from yesterday’s close.

Yesterday’s volatility comes as a leading central banker, Agustin Carstens, the head of the Bank of International Settlements called Bitcoin a “bubble, a Ponzi scheme and an environmental disaster.”

Bitcoin Threatens to Undermine Public Trust in Central Banks

Carstens was speaking at the Gothe University in Frankfurt, Germany. He said that the cryptocurrency threatened to undermine public trust in central banks. They posed a threat to financial stability, and he called for a global clampdown.

Deutsche Bundesbank

If authorities do not act pre-emptively, cryptocurrencies could become more interconnected with the main financial system and become a threat to financial stability. There is a strong case for policy intervention. Appropriate authorities have a duty to educate and protect investors and consumers, and need to be prepared to act

Carstens, is a former governor of central bank of Mexico. He said that despite the out of the world rise of Bitcoin and cryptocurrencies, they are merely pretending to be currencies. They are not safe and potentially facilitating tax evasion, money laundering and other forms of criminal finance.

Global Regulators are Preparing a Crackdown on Bitcoin

Right now, Carstens is the head of a body that represents the world’s central banks. His comments are a succinct sign yet that global regulators are preparing a crackdown on Bitcoin. The price of this cryptocurrency rose 900% last year. It was, hands down, the best performing asset of 2017. Bitcoin hit a high of nearly $20,000 during the week before Christmas.

Banks like Bank of America, Citigroup, JP Morgan and now Lloyds of London have now banned purchases of Bitcoins with their credit cards du to volatility and other banks will probably join the ranks.

Bitcoin has now fallen by more than 50% since the beginning of 2018. Cryptocurrency investors are growing more and more fearful of increased regulation and intervention from global regulators.

Is Bitcoin Parasitic on Real Currencies?

Bitcoin is not recognized or regulated by any central bank. It is completely decentralized. The cryptocurrency allows consumers to go around traditional banks and payment methods so they can pay for goods and services.

He also said that global central banks should pay attention to the ties linking cryptocurrencies to real currencies. This will help to make sure that the relationship was “not parasitic.”

Facebook Bans Cryptocurrency Advertsiing

Carstens comments follow a number of warnings about Bitcoin from regulatory authorities and economists around the world. Some of these global authorities include India, the United States and South Korea. Also, the social media giant, Facebook has banned Bitcoin and other cryptocurrency advertising.

On Monday Lloyds Banking Group and Virgin Money joined other global commercial lenders, mentioned above in banning customers from using their credit cards to purchase Bitcoin. They are growing increasingly worried that they will be left holding the bag and liable if the cryptocurrency’s value implodes.

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