Posted on

BIS Chief to Crypto Coders: 'Stop Trying to Create Money'

The head of the Bank of International Settlements has predicted a bad ending for cryptocurrencies, calling for an end to their production in a recent interview.

In an interview with a Basel-based media outlet on June 30, Agustín Carstens took aim at cryptocurrencies and reiterated his belief that they represent “a bubble, a Ponzi scheme and an environmental disaster,” according to a transcript published by the BIS on Wednesday.

Asked whether he agrees that cryptocurrency has had a positive impact by making young people think about money, Carstens asserted that cryptocurrencies don’t have the core features to be a currency. As such, the BIS head contended that the activities associated with cryptocurrency represents an effort to create money out of nothing.

“Young people should use their many talents and skills for innovation, not reinventing money. It’s a fallacy to think money can be created from nothing,” Carstens said, adding:

“Glance back into the past and you will see that creating gold or money from nothing has been a regular obsession. It never worked. … So my message to young people would be: Stop trying to create money!”

After being appointed as the general manager in December 2017 to lead the BIS, an international institution known for its role as a kind of bank for central banks, Carstens has not shied away from making strong comments on cryptocurrency.

As previously reported by CoinDesk, the BIS chief issued sharply critical statements about cryptocurrency in February of this year.

Agustín Carstens image via Banco de México/Flickr

The leader in blockchain news, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups.

Posted on

Economist Roubini: 'Crypto Crazies' Are 'Cyber Terrorists'

Nouriel Roubini, the former Clinton administration economist nicknamed “Dr. Doom” due to his prediction of the 2008 financial collapse, resumed his criticism of cryptocurrencies on Twitter Tuesday.

Just prior to a Senate Committee hearing on cryptocurrencies, he wrote, “Cryptocrazies are also criminal Cyber-Terrorists,” and alleged that his consulting firm, Roubini Global Economics, was targeted in a 2015 denial-of-service attack because he had criticized bitcoin.

Roubini further claimed that he had received death threats as a result of his views. Roubini said in the tweet that he anticipated another attack, and had received new threats to this effect.

These alleged threats did not force the economist to back down from his stance on bitcoin, however. In another tweet, the New York University professor praised Agustin Carstens, the head of the Bank for International Settlements (BIS) for labeling bitcoin as a “Ponzi scheme” in a speech earlier today.

In other tweets, Roubini posted links to several articles claiming a connection between bitcoin and criminal activity. At the same time, he noted bitcoin’s recent price decline and the overall cryptocurrency market correction, saying that bitcoin is starting “to look like a dinosaur on the way to extinction,” and suggested that its value will remain volatile.

As previously reported by CoinDesk, Roubini has been a consistent and vocal critic of bitcoin and cryptocurrencies more generally.

Last month, he condemned the notion that cryptocurrencies could replace fiat currencies as “utterly idiotic.” In the past, he has also dismissed bitcoin as a bubble and a “Ponzi game.”

Image via Shutterstock

The leader in blockchain news, CoinDesk is an independent media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. Have breaking news or a story tip to send to our journalists? Contact us at news@coindesk.com.

Posted on

BIS Chief Slams Bitcoin As Ponzi Scheme and Threat to Central Banks

The head of the Bank for International Settlements (BIS) has blasted bitcoin as “a combination of a bubble, a Ponzi scheme” and, due to the energy consumption required for mining it, an “environmental disaster”

Calling for more regulation in a speech today, Agustin Carstens, general manager of the BIS, warned that cryptocurrencies could become “parasites” on the financial system and argued that they must be held to the same standards as other banking and payment services, Reuters states.

Forbes further cites Carstens as saying that cryptocurrencies should not be allowed to undermine trust in central banks. He argued that the consequences of debasing this trust have historically been detrimental, citing the 19th century production of currencies by private banks as a cause of financial turmoil that subsequently brought about the creation of the Federal Reserve System.

“The tried, trusted and resilient modern way to provide confidence in public money is the independent central bank,” Carstens stated, while lauding the protections banks afford consumers and investors.

He also claimed that cryptocurrencies are “not sustainable as money,” adding that they fail to meet the “basic textbook definition” of a currency. The volatility of cryptocurrencies, the BIS chief went on, is tolerated mostly by those “who massively evade taxes or launder money.”

Carstens’ remarks put him in the company of a growing list of heads of state and influential finance figures condemning bitcoin and other cryptocurrencies, which have recently suffered substantial losses in value.

Billionaire George Soros made similar assertions last month, saying that the term “cryptocurrency” is a misnomer, because a lack of stable value precludes it from being a currency at all.

Agustin Carstens image via Sari Huella/Wikimedia Commons

The leader in blockchain news, CoinDesk is an independent media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. Have breaking news or a story tip to send to our journalists? Contact us at news@coindesk.com.

Posted on

Mexican Law Would Give Central Bank Oversight of Cryptocurrency Startups

Mexico’s government is close to introducing legislation that would regulate fintech firms, including those that work with cryptocurrencies.

The latest draft of the bill, according to reports from regional newspaper El Economista and Reuters, would clarify that cryptocurrencies like bitcoin are not legal tender in Mexico. Further, the legislation would give the Bank of Mexico, Mexico’s central bank, the power to regulate firms working with cryptocurrencies.

The draft states (according to a translation):

“[Financial technology firms] can only operate with virtual assets that are determined by the Bank of Mexico through general provisions. To carry out operations with such virtual assets, they must have the prior authorization of the Bank of Mexico.”

The text of Mexico’s fintech bill has been circulating since this spring, focused on companies that provide “alternative means of access to finance and investment” – including those dealing with digital assets and cryptocurrencies. An earlier draft, released back in March, had reportedly contained rules focused on “institutions dedicated to the purchase and sale of virtual assets,” though that language has now been dropped.

According to recent statements from Mexican President Enrique Pena Nieto, the legislation will be introduced by September 20. Reuters reports that it will first be considered by an independent commission, after which it will be sent to the Mexican Senate for further deliberation.

Agustín Carstens, governor of the Bank of Mexico, has previously stated that unless cryptocurrencies such as bitcoin are recognised by a bank or government, they do not meet the definition of a currency.

At a lecture at Mexican technical university ITAM in August, Carstens argued that “technological development in the financial system cannot be the result of innovation alone”, but must occur in tandem with new regulations.

Mexican pesos image via Shutterstock

The leader in blockchain news, CoinDesk is an independent media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. Have breaking news or a story tip to send to our journalists? Contact us at [email protected].