Global Banking Regulator Labels Bitcoin Investment “Dangerous”

Stefan Ingves becomes latest in a string of financial figures who have likened Bitcoin to tulip bulbs; claims Bitcoin is a crypto-asset, not a cryptocurrency.

Sweden's Riksbank governor and head of global regulators at the Basel Committee Stefan Ingves thinks investing in Bitcoin is a “dangerous” activity, owing to the digital currency’s high volatility and the lack of backing from regulators and central banks.
Proponents of cryptocurrencies see them as the future of money – the fact that they are decentralized and privacy-focused has been touted as a way of taking back control from the establishment and traditional financial institutions.
However, Bitcoin’s volatility has played a major role in keeping many investors, governments, regulatory authorities and banks on the back foot.
Bitcoin’s recent display of volatility has seen it breaking through major milestones within hours. The cryptocurrency swung wildly between drastic highs and lows yesterday, rising more than $3000 within a single day and peaking at above $18,000 only to drop suddenly to approximately $15,000 a few hours later.
Speaking to CNBC, Ingves expressed wariness about Bitcoin’s recent blinding highs, claiming similar examples from history show that Bitcoin is unlikely to succeed in establishing itself as the future of money.
“If you look at what has happened in the past when it comes to reaching those type of heights, being it tulip bulbs or a bunch of other things over the centuries, the odds are against those who actually think that this is going to be the future.”
Ingves is not the first to liken the current Bitcoin frenzy to the 17th century tulip bulb mania – a major financial bubble where tulip bulbs rose in value and were traded on Dutch stock exchanges before a sudden drop in price sparked mass panic and selling, bringing the price down to a fraction of what it had once been and leaving many to suffer heavy losses.
Fierce Bitcoin critic, JPMorgan Chase CEO Jamie Dimon, and billionaire hedge fund manager Ken Griffin have also compared Bitcoin to the tulip bulb mania, while Denis Gartman recently claimed that Bitcoin has surpassed the absurdity of Holland’s 1630s tulip bulb mania.
In addition to volatility concerns, Bitcoin’s rising price coupled with increasing transaction fees means it is somewhat impractical to use the coin as currency. Investors at the moment appear more focused on buying and holding to turn a profit, as opposed to using Bitcoin for transactional purposes.
“I think it's wrong to call it a cryptocurrency, it's crypto-something … Kind of a crypto-asset but definitely not a cryptocurrency,” noted Ingves.
He also went on to state that while regulators worldwide were “highly aware” of the latest developments in Fintech, it was too early to predict “where that will take us when it comes to regulatory frameworks”. However, he did assert that no matter how much hype fintech generated and or how advanced it got, it was not likely that it would replace “old fashioned banking” any time soon:
“… I don't think that is going to happen because regardless of the technology available, in most countries we have had banks for hundreds and hundreds of years and most likely it is going to continue that way.”

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