Cryptocurrencies Prone to Money Laundering, No Intrinsic Value, Buy if Prepared to Lose all Money
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The US Treasury has issued a warning advising against the use of cryptocurrencies, stating that digital coins are at risk of being used for money laundering activities. The report says that cryptocurrencies are not a legal tender to be used as a medium of exchange in the market, and this is a major risk for the investors. The warning also advises that such digital coins have no intrinsic value and are not backed by any tangible assets.
While the idea of digital currencies with no intrinsic value like Bitcoin being used as currencies may seem like the first step towards a future where money is obsolete, it may in fact be the first step toward a future where central banks are obsolete. We live during an era where the value of national currencies is increasingly being called into question. Whether it is the Greek debt crisis, the Brexit referendum, the Chinese Yuan devaluation, or the U.S. Federal Reserve’s monetary policy, the stability of government-backed currencies is being challenged as never before.
European Central Bank (ECB) President Christine Lagarde has warned that cryptocurrencies are vulnerable to money laundering. She agrees with Bank of England Governor Andrew Bailey, who recently said that cryptocurrencies have no intrinsic value and that investors should be prepared to lose all their money if they invest in them.
ECB chief Lagarde says cryptocurrencies are a real risk for investors
European Central Bank (ECB) Governor Christine Lagarde spoke about cryptocurrencies on Friday in a webinar hosted by the European University Institute. She said:
Cryptocurrencies are a bad mix of both, and I wholeheartedly agree with Dr. Bailey’s conclusions on this point.
Ms Lagarde went on to say that there are crypto assets that people can invest in and take all the risks, and there are some crypto assets that I think are so vulnerable to money laundering activities. She didn’t mention any crypto-currency.
Asked if the ECB is competing with cryptocurrencies with its digital euros, Lagarde said cryptocurrencies are different from stablecoins and central bank digital currencies (CBDCs). On investing in cryptocurrencies, the ECB chief stressed that it is a real risk that people take, quoting Bank of England governor Andrew Bailey.
Bank of England Governor Andrew Bailey said at a press conference on Thursday that cryptocurrencies have no intrinsic value. He noted, however: This is not to say that people do not value them, as they may have some external value. But they have no intrinsic value.
The governor of the Bank of England, who has long been skeptical of cryptocurrencies, reiterated:
I’ll say it again in no uncertain terms. Don’t buy them unless you’re willing to lose all your money.
The UK’s financial regulator, the Financial Conduct Authority (FCA), also said in January that investing in crypto assets, or related investments and loans in general, pose a very high risk to investors’ money…. When consumers invest in these types of products, they should be prepared to lose all their money.
This is not the first time Lagarde has expressed concern about money laundering linked to cryptocurrencies. In January, the ECB president said that cryptocurrencies are a highly speculative asset that engages in some interesting and downright reprehensible money laundering activities.
His comments drew the ire of many in the crypto community. Daniel Lacalle, fund manager and chief economist at Tressis Gestion, for example, replied: This is absolutely outrageous when you know that the vast majority of money laundering in the world is done in fiat currencies, particularly the US dollar and the euro.
What do you think of Ms Lagarde’s comments on bitcoin and other cryptocurrencies? Let us know your comments in the section below.
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