The recent boom and interest of corporations in Bitcoin have alarmed the global regulators, and now many are publicly announcing the risks of such investments.
Timothy Lane, the Deputy Governor of the Bank of Canada, recently spoke on the future of digital currencies and further addressed the recent rally of digital currencies, calling it a ‘speculative mania’.
“The recent spike in their prices looks less like a trend and more like a speculative mania — an atmosphere in which one high-profile tweet is enough to trigger a sudden jump in price,” Lane said.
His statement came after Bitcoin prices touched a new record following the announcement of Tesla of purchasing $1.5 billion worth BTC. The tweet part was justifiable given the swings in Bitcoin prices with tweets from personalities like Elon Musk.
Moreover, Lane elaborated that Bitcoin ‘do[es] not have a plausible claim to become the money of the future.’
No Room for Private Currencies
Though he sees a future for digital currency, those have to be issued by central banks, not by any private company. He stressed that if private players start issuing digital currencies, it will not be in the interest of the public.
Additionally, he elaborated on the data harvesting by tech companies and explained that it will create a dangerous business model with the mass economy.
“If that business model were used as a foundation for the dominant method of payment in the economy, the issuer would gain control over an enormous range of data, bringing with it overwhelming market power,” he said.
“In effect, a technology company could become the gatekeeper of the entire economy, with concerning implications for privacy, competition and inclusion.”
Furthermore, the Bank of Canada is studying the feasibility of issuing its own digital currency and joined a consortium of several other monetary regulators.
Meanwhile, other celebrated mainstream economists are raising concerns over the rise of cryptocurrencies. Janet Yellen, the US secretary of the Treasury Department, recently mentioned the role of digital currency in money laundering.