Digital Assets: South Korean Central Banker Engages In Bitcoin Bashing

February 25, 2021 | Digital Assets, News, Regulations
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After Lagarde and Yellen, Bank of Korea Governor Lee Ju-yeol is critical of bitcoin, the leading cryptocurrency.

Bank of Korea Governor Lee Ju-yeol, when speaking at a parliamentary session on Wednesday, said crypto-assets such as bitcoin had no intrinsic value and were victim to highly volatile price swings. (Yonhap News Agency)

Lee claimed the recent rally in bitcoin was probably due to many factors including heavy buying by Elon Musk’s Tesla (NASDAQ: TSLA).

Lee Ju-yeol on institutions and bitcoin

He also attributed the phenomenon to institutional investors purchasing bitcoin as an economic hedge.

“These assets saw a steep rise in the shortest period of time. I would say institutional investors’ assessment of using bitcoins as a hedge could be interpreted as another factor,” Lee explained.

Lagarde calls bitcoin “funny business”

Last month, European Central Bank President Christine Lagarde called for co-ordinated, global action to regulate bitcoin.

She too was concerned about the roller-coaster price moves in bitcoin and said:

“For those who had assumed that it might turn into a currency, terribly sorry but this is an asset and it’s a highly speculative asset which has conducted some funny business and some interesting and totally reprehensible money-laundering activity.”

U.S. Treasury Secretary Janet Yellen on bitcoin and a digital dollar

Speaking at the 2021 DealBook DC Policy Project earlier this week, Yellen said bitcoin is “highly speculative.”

She called for the protection of investors dabbling in cryptos and said it was a top priority to ensure bitcoin is not used for illicit transactions.

Yellen also said at the virtual conference that central banks should examine creating and issuing sovereign digital currencies.

Regarding a U.S. CBDC, Yellen said that a digital dollar, overseen by the Federal Reserve, tied to the blockchain, could result in “faster, safer and cheaper payments.”

In contrast, she said, “bitcoin is an extremely inefficient way of conducting transactions and the amount of energy that’s consumed in processing those transactions is staggering.”

South Korea is already mulling a digital CBDC. Bank of Korea Governor Lee Ju-yeol also said at the Wednesday parliamentary session that the central bank is on track to enable the use of a central bank digital currency. “The bank is close to completing our review of designs and relevant technologies regarding bank-controlled digital currencies,” he said.

Swedish regulator also warns on crypto-assets

Swedish regulator Finansinspektionen’s (FI) Director-General Erik Thedéen issued a warning on the risks surrounding purchases of financial instruments with bitcoin or other crypto-assets as an underlying asset.

“Products based on crypto-assets are unsuitable for most, if not all, retail consumers. The consumer protection available is inadequate, and crypto-assets are difficult, if not impossible, to value on a credible basis. That is why we are warning consumers about the risks associated with these financial products.”

“There is a high risk that consumers will lose money on their investment. This type of product is also not subject to the same consumer protection regulations that apply to many other types of investments.”

Related Story:   ECB’s Lagarde Lashes Out At Bitcoin                                               

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