Growing popularity Bitcoin worried about governments and central banks. The last straw became legalization of cryptocurrency in El Salvador… Of get up with economists from German bankmany politicians, authorities, bankers and economists are calling for market regulation, and this regulation is intended not only to protect investors, but also first of all, maintain the monopoly of control over money what the public authorities use today.
“Bitcoin, along with other cryptographic (sic) assets, has gone beyond widespread use and can no longer be ignored … As cryptocurrencies begin to compete seriously with conventional and fiduciary currencies, regulators and legislators will take action.”, say the experts of the German bank.
Deutsche Bank’s report was published following the publication of the Basel Committee on Banking Supervision. launched a public consultation proposing that banks establish stricter requirements when dealing with bitcoins and other cryptocurrencies.
The proposal is to split digital assets into two groups, placing Bitcoin in the group with the highest risk. On this basis, any asset of this group in the portfolio will receive a risk weight of 1250%, which is the highest indicator provided by the Basel Committee.
In practice, this means that the bank will need a dollar of cash for every dollar of bitcoin, all with a minimum capital requirement of 8%.
Governments will try to prevent cryptocurrencies from competing with fiat currencies.
According to the bank, large economies will in every way prevent cryptocurrencies from overshadowing the currencies that currently dominate the monetary system.
Crypto assets are on the agenda for most G20 countries. These countries do not want to allow cryptocurrencies to compete with government-backed fiat currencies.
Regarding regulatory measures, the bank expects the rules of the game to change by 2021, and by 2022 the most developed countries will have a solid regulatory framework for crypto assets.
“Governments around the world have fragmented approaches to regulating bitcoin and other cryptocurrencies. Some countries, such as El Savaldor, have allowed Bitcoin to become their currency.“, – said in the message of the bank, adding “… El Salvador’s decision paves the way for other emerging market economies to take similar steps. This is especially true for economies that suffer from instability and heavy reliance on the US dollar. ”
Why is the obsession with regulating something that cannot be regulated?
Just for try so that cryptocurrencies do not jeopardize the control exercised by the authorities over the monetary system, currency and monetary policy.
Bitcoin is decentralized and unregulated – the market is there, but Bitcoin is not. So, whatever governments and “authorities” decide, Bitcoin will always work the way it was created.
While much of the regulation of cryptocurrencies is still done in words and not in deeds, the latest communiqués from the authorities contain a very clear message.
The spearhead will leave the United States under the command of Joe Biden. With the arrival of a Democrat in the White House, the US financial authorities are preparing to take a more active role in regulating the market.
The reason for trying to stifle the market may well be the story that cryptocurrencies are used in illegal activities.
“Some cryptocurrencies are used by terrorists for criminal activities, hackers, fraudsters. The activity on the darknet and ransomware has been steadily growing since 2019. By 2020, ransomware scams have increased by over 30%. These scams, which often involve cryptocurrencies, remain the largest source of illegal activity in the world. In 2020, scammers received nearly $ 2.5 billion. ”Deutsche Bank analysts say.
The bank completed the report by stating that cryptocurrencies submit more and more threat to monetary and financial stabilityand central banks and governments will not give up their monetary monopoly.
So, as bitcoin and other cryptocurrencies begin to compete seriously with government fiat currencies, regulators and legislators will soon take tough action.
