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Will the US outlaw Bitcoin?

Photo of: Nathan VDH
by Nathan VDH

Calls for regulation of cryptocurrencies are growing. Agustín Carstens, the head of the Bank for International Settlements, is a supporter, but also a long-time crypto-skeptic.

Among central banks, the least we can say is that cryptocurrencies are not popular. Their representatives follow one another to denounce the risks represented by these currencies.

Speculation, volatility, terrorist financing … the arguments against Bitcoin and other crypto-assets are not lacking. Agustín Carstens, the director of the Bank for International Settlements (BIS), also brandishes these threats.

In an interview with CNBC, he believes that these currencies allow to escape the laws. Thus, these cryptocurrencies would free themselves from the fight against money laundering and terrorist financing.

Consequently, they should be subject to stricter regulation, calls the leader. Wouldn’t these successive statements by central bank representatives be primarily motivated by other reasons?

Don’t cryptocurrencies threaten fiat currency and monetary sovereignty first and foremost? Not at all, in the opinion of Agustín Carstens. According to him, their role is limited to that of “speculative vehicle”.

“I don’t see cybercurrencies dominating,” says the BIS boss, who also disputes any breakthrough “as a currency,” especially for payments. However, this is the function of one category of them: stablecoins.

But for Carstens, the applications of stablecoins remain “limited”. So no worries from central bankers. Because of these limited uses, “I don’t see any challenge (…) to sovereign money from these private currencies”, he considers.

These words are directly reminiscent of those of Fed boss Jerome Powell: “Stablecoins may have a role to play with appropriate regulation, but that role will not be to form the basis of a new global monetary system. “

Not a threat to states, cryptocurrencies nonetheless need to be regulated for these leaders. This speech could well become reality. Deutsche Bank is banking on crypto assets being regulated as early as late 2021 or early 2022.

In an interview with Yahoo Finance, the founder of the $150 billion hedge fund Bridgewater Associates, even declares a ban on Bitcoin in the United States likely. This policy would replicate the one applied to gold in the 1930s.