Wednesday 26 September 2018

Bitcoin is a 'dangerous illusion'

Stock image
Stock image

Russell Ward

The chairman of France's market regulator has denounced bitcoin as a "dangerous illusion" and a tool for criminals, siding firmly against the cryptocurrency as its value climbed further past $11,000.

The chairman of France's market regulator has denounced bitcoin as a "dangerous illusion" and a tool for criminals, siding firmly against the cryptocurrency as its value climbed further past $11,000.

"It's a way to purchase illicit goods, it's a way to launder illicit income, it's a way to develop and pay for cybercrimes and it's a pure empty commodity," Robert Ophele, chairman of the Autorite des Marches Financiers, said yesterday. "If it were a currency, it would be a very bad one."

Mr Ophele said he isn't sure he'd want to regulate bitcoin because it has no link to the real economy. Authorities and banks worldwide are grappling with how to treat the cryptocurrency, which has surged tenfold this year on growing speculation that it will find a lasting role in the financial system.

Goldman Sachs chief executive Lloyd Blankfein said last week that it's too early for his bank to need a bitcoin strategy and he doesn't consider it to be a store of value. BNP Paribas chairman Jean Lemierre said yesterday that it's a commodity rather than a currency.

"It's a challenge for central bankers and for financial supervisors," said Mr Ophele. It's an unregulated market and I should say it's a dangerous illusion."

Meanwhile, the planned introduction of bitcoin futures contracts at CME Group, Cboe Global Markets and Nasdaq will make it much easier to short the cryptocurrency. Hedge funds, which have largely stayed on the sidelines, are waiting for the Chicago Mercantile Exchange's futures market to open for a fresh opportunity to bet against the cryptocurrency, according to people trading the assets.

"The futures reduce the frictions of going short more than they do of going long, so it's probably net bearish," said Craig Pirrong, a business professor at the University of Houston. "Having this instrument that makes it easier to short might keep the bitcoin price a little closer to reality." (Bloomberg)

Irish Independent

Business Newsletter

Read the leading stories from the world of Business.

Also in Business