The central bank of Singapore has been studying the potential risks posed by cryptocurrencies, but there is as yet no strong case to ban trading of the digital coins in the city-state, Deputy Prime Minister Tharman Shanmugaratnam said.
“Cryptocurrencies are an experiment. The number and different forms of cryptocurrencies is growing internationally. It is too early to say if they will succeed,” he said.
“If some do succeed, their full implications will also not be known for some time,” the deputy prime minister said in a written answer to questions from members of parliament on banning the trading of bitcoin or cryptocurrency.
“The Monetary Authority of Singapore has been closely studying these developments and the potential risks they pose. As of now, there is no strong case to ban cryptocurrency trading here.”
In another development, the head of the Bank for International Settlements (BIS) said central banks must prepare to act against cryptocurrencies to ensure they do not become entrenched and undermine trust in central banks.
Agustin Carstens, general manager of the BIS, an umbrella organisation for the world’s central banks, said in a speech that cryptocurrencies such as bitcoin were “probably not sustainable as money” and failed the “basic textbook definition” of being a currency.
“There is a strong case for policy intervention,” he said, speaking at Frankfurt’s Goethe University today.
“These assets can raise concerns related to consumer and investor protection. Appropriate authorities have a duty to educate and protect investors and consumers, and need to be prepared to act.”
“Private digital tokens masquerading as currencies must not subvert this trust (in central banks)”, he warned, but stopped short of suggesting what concrete measures should be taken.
Carstens described bitcoin as “a combination of a bubble, a Ponzi scheme and an environmental disaster”. The last refers to the energy-intensive process of “mining” the digital currency.
To prevent cryptocurrencies from becoming “parasites” on existing financial infrastructure, Carstens said that only those exchanges and products which met accepted standards should be given access to banking and payment services.
“This means same risk, same regulation. And no exceptions
allowed,” he added.