Bitcoin volatility makes it unusable as currency says EU regulator boss
Despite being called a currency, Bitcoin lacks many of the very important characteristics that currencies have, Steven Maijoor, chairman of the European Securities and Markets Authority (ESMA), said in an interview with Bloomberg. The extreme volatility of the biggest cryptocurrency alone undermines its use as an actual currency, and it is also not broadly accepted, Dutch man said.
Bitcoin's value fell about 25 percent on Tuesday. Since touching 20 thousand dollars on December 17th, the cryptocurrency's value dropped over 49 percent.
"And people that are investing in this should be prepared to lose all of their money." Maijoor said. "We also know that in some cases this attracts people that have less good intentions. There might be fraud or there might be money laundering."
As regulator, ESMA continually monitors financial innovations, Maijoor said. The regulator has a team dedicated solely to this purpose. "As a regulator you always need to monitor the financial innovation and apply the right tool at the right moment." In November last year ESMA warned investors against the risks of ICOs. The regulator is also keeping an eye on blockchain to see if it can develop under the current regulations. "Every regulator needs to use their tools depending on the local situation."