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Ireland’s Central Bank Official: Cryptocurrencies Are Great Concern

UTC by Godfrey Benjamin · 3 min read
Ireland’s Central Bank Official: Cryptocurrencies Are Great Concern
The Irish Central Bank Building, Dublin, Ireland. Photo: Depositphotos

Rowland believes that though the market is ripe for regulations, there is yet a long way to go.

Derville Rowland, one of the top officials at Ireland’s central bank has mulled the growing popularity of cryptocurrencies such as Bitcoin (BTC) as a “Great Concern”. According to a report by Bloomberg, Rowland, in addition to this warns of how speculative digital currencies can be.

“Crypto assets are quite a speculative, unregulated investment,” and people should be “really aware they could lose the whole of that investment,” Rowland, who is the central bank’s director-general for financial conduct said in an interview.

Rowland has now identified with the growing list of central bank executives around the world that has criticized Bitcoin over the past weeks. These financial veterans may be justified as the cryptocurrency market has taken an unprecedented dump in recent times. From a market price and capitalization of about $64,000 and $1.3 trillion a few weeks ago, BTC is now trading at a price of $36,653 and a market cap of $689 billion. These types of plunges are strange in the traditional financial ecosystem.

Before Rowland’s criticisms, Andrew Bailey, the Bank of England Governor, has cautioned that cryptocurrencies have no intrinsic value and people should only buy them if they’re prepared to lose their money. In the past week, the Governor of the Bank of Japan, Haruhiko Kuroda also bemoaned the “extraordinarily high” volatility of the premier digital currency.

Great Concern for Cryptocurrencies Could Spark New Regulations

The digital currency investment niche now represents a viable option for investors looking to diversify their capital. The proposed gains the cryptocurrency industry offer has particularly attracted many new investors with a knack for taking risks. The growing concerns for the crypto ecosystem from strict regulators like Rowland, account for why new regulations may soon be introduced into the industry.

Rowland per the Bloomberg report is set to take over as chairwoman of the European Securities and Markets Authority (ESMA)’s investment management standing committee. ESMA is the body that rolls out regulations for the Funds industry. Amongst the many concerns Rowland will lead the ESMA to clamp down on including the ‘gamification’ of stock investing as the Reddit fueled short squeeze saga involving firms like GameStop Corp (NYSE: GME), and AMC Entertainment Holdings Inc (NYSE: AMC) amongst others.

According to Rowland, the European Securities and Markets Authority has held discussions on the issue, as well as Ireland’s central bank. While noting that a timeline has not yet been defined to roll out new regulations, the soon-to-be ESMA boss believes that regulations need to be “technology-neutral,” she said, “so that you’re not getting better protections in older paper-based processes than you are in more online processes.”

Rowland believes that though the market is ripe for regulations, there is yet a long way to go per the demand to champion diversity in the investment management sector.

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