If 2021 is the main year of cryptocurrencies – after 2020, where, of course, names like bitcoin shattered previous highs – the news may be less than stellar.
At this writing, we have more evidence of the highly turbulent nature of crypto, indicated by the kind of volatility that gives one whiplash, especially to those holding bitcoin.
Two-digit price reductions have sent crypto the marquee to levels not seen in weeks. Bitcoin recently changed hands at $ 32,580, down from its highest ever high set earlier in the year of more than $ 41,000.
The anticipated mainstream adoption (which crypto enthusiasts are hoping for), we note, could face significant skulls. Consider the fact, as reported in this space, that Janet Yellen, President Joe Biden’s nominee for Treasury Secretary, has highlighted cryptos as an area of ”particular concern” used “primarily for illegal financing. ”
“The technologies to bring about this change over time, and we need to ensure that our approaches to dealing with these issues, with the financing of technology terrorism, change along with changing technology – cryptocurrencies are a particular concern, “Said Yellen to the Senate Finance Committee. .
Compensation for Crypto Victims?
In Europe, there is at least some basis to move to offset the financial impact of crypto-related crime. Coindesk reported that a petition had been sent to the European Parliament to implement a “regulatory scheme to compensate victims.” Under the mechanics of that fund, as proposed by attorney Jonathan Levy, the European Union would charge a .0001 percent euro fee on cryptocurrency transactions. The fees would be collected into a fund that would then compensate victims of various crypto-related crimes.
At a high level, there are some indications that the EU would be less than acceptable for bitcoin and its brothers to use in everyday trading, in part because of above price volatility and the vulnerability of fraud.
Yellen’s comments echo observations made earlier this month by the European Central Bank (ECB) President Christine Lagarde, who noted that cryptos, as a whole, is “a highly speculative asset, which has conducted some funny business and some an interesting and totally understandable money laundering activity. . ”He went on to say“ there must be regulation. This must be applied and agreed … on a global level because if there is an escape escape will be used. ”
Lagarde had already indicated that, at the end of last year, the European Central Bank will be able to launch a digital version of the euro within four years. In a speech, Lagarde said, “If the technology is cheaper, faster, safer for the consumers then we should explore it and if it is going to contribute to better financial sovereignty, better autonomy for the eurozone, I think we should explore it. ”
Meanwhile, on Wednesday (January 20), the European Commission and the ECB released a joint statement saying they are considering starting work on digital euro. The work would involve “pursuing their efforts towards a strong and vibrant European digital finance sector and integrated payments sector to respond to new payment needs in Europe.”
The urgency may be there for digital fiat, for such focused central bank efforts, against a macro background that illustrates the continuing need for large incentive payments to individuals and companies. Lagarde said on Thursday that the ongoing pandemic poses “a serious risk to the eurozone and global economies” and that “sufficient financial stimulus remains essential.”