Bitcoin fraud: Victim discusses ‘warning bells’
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China’s extensively regulated economy, governed by the People’s Bank of China, has clamped down on cryptocurrencies several times in 2021, especially Bitcoin. The bank levelled a new threat in tandem with 10 other government agencies last month, reiterating its position that it considers all cryptocurrencies illegal. At the same time, it resolved to “resolutely clamp down” on the industry, causing the market to sink and renewing a similar discussion in the west.
Could western banks ban cryptocurrencies?
The cryptocurrency market has boomed in the west, especially in the US – where investors have cooked up a legion of new alternative currencies that added thousands of points to their value this year.
Their popularity has allowed some people to make millions of dollars, but market volatility and emerging scams have caused others to lose just as much.
Many pitfalls associated with cryptocurrencies come from a lack of regulation, and some leading western economists have toyed with following China’s lead.
The UK’s champion of this position is NatWest chief Sir Howard Davies, one of the most eminent figures in the City of London.
Sir Howard, who once served as deputy Bank of England governor and chairman of the Financial Services Authority, said in early October that he was “very hostile” to virtual currencies.
Speaking to the Centre for the Study of Financial Innovation in a televised interview, he praised China’s “instinct” to “ban the damned stuff”.
He dubbed trading cryptocurrencies “gambling” with a “libertarian veneer”.
And he then warned the market should come with a “big sign on the door” warning: “Abandon Hope All Ye Who Enter Here”.
Sir Howard’s position isn’t as unusual as it might sound, as he echoes warnings issued by other financial authorities in the UK.
Institutions such as the Financial Conduct Authority (FCA) have warned people they risk falling victim to scammers or losing their money to market machinations.
They haven’t recommended a ban, however, despite flexing their muscles in this direction before.
During the summer of this year, the FCA banned Binance Markets from undertaking regulated business.
The move, which officials took in June, meant Binance’s only regulated entity in the UK had to cease business.
The FCA did explain why, but some experts believe they intended to warn consumers about the inherent risks involved in trading cryptocurrencies.
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But not every western economy has approached the market with hostility, as some capitalist societies have shown a willingness to incorporate the emerging market into their existing frameworks.
Canada, for example, has made exchange-traded funds (ETFs) for Bitcoin available to trade publicly.
ETFs include funds comprised of cryptocurrencies that track the price of one or more tokens and come with a share price.
Investors have been able to buy and sell these in Canada since February this year via the Toronto Stock Exchange.
When trading, they can own cryptocurrencies indirectly, mitigating some of the risks associated with trading on the virtual market.
Other economies have started to see this as a viable move, including the US.
Last week the US followed its northern neighbour’s lead, allowing people to trade ETFs over the New York Stock Exchange (NYSE).
The ETF debut broke exchange records as people bought Bitcoin-backed financial products en masse, boosting the debut trade volume to $1 billion in one day.
Should this continue to show success in the US, other economies may prove unwilling to ban currencies.
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