1. News
June 11, 2021

Cryptocurrency enthusiasts slam bitcoin regulation proposals

By Eric Johansson

Global banking regulators want to impose stricter rules for dealing with bitcoin and cryptocurrency enthusiast are not happy about it.

The Basel Committee on Banking Supervision consists of financial regulators from the leading economies around the world. On Thursday, the committee announced that it is issuing a consultation that could translate into stricter rules for the world’s cryptocurrencies.

While recognising that few banks around the world currently accept bitcoin, ethereum, dogecoin and other similar digital assets, the committee said firmer rules should be introduced to limit the risk of dealing with digital money.

“Cryptoassets have given rise to a range of concerns including consumer protection, money laundering and terrorist financing, and their carbon footprint,” the committee said. “The committee is of the view that the growth of cryptoassets and related services has the potential to raise financial stability concerns and increase risks faced by banks.”

The “new conservative prudential treatment” for cryptocurrencies would force banks to put aside enough money to cover 100% of any potential losses in order to avoid putting the entire financial ecosystem at risk.

Stablecoins, which are a type of cryptocurrency tied to a country’s official currency, would not be subject to the same strict rules as they’re deemed to be more akin to traditional assets such as bonds, loans, deposits, equities or commodities.

Central bank-run digital assets, like China’s digital yuan, would be exempt from these rules too.

The committee’s official consultation into these proposals will end on 10 September 2021.

Cryptocurrency enthusiasts around the globe have complained that the new proposals amount to fear-mongering, go against the decentralised nature of digital assets like bitcoin and claimed they’ll discourage banks from holding digital assets as the potential costs could be too high.

Others simply tweeted “FUD”, an acronym popular among cryptocurrency evangelists that stands for “fear, uncertainty and doubt”.

Interestingly, the price of bitcoin jumped slightly on the back of the news from $35,991 on Wednesday to $38,200 on Thursday. That being said, it’s still a far cry from the $64,000 record high recorded in April.

The committee’s proposal comes as market analysts believe more cryptocurrency regulations are incoming, news which was met by similar pushbacks from bitcoin devotees when Verdict reported on them.

Indeed, countries like the US, China, the UK and Iran have either introduced tougher bitcoin regulations, or said they may do so in future.

On the other hand, El Salvador this week became the first country to accept bitcoin as legal tender and there are already rumours that India may soon follow.