Volatility of bitcoin ‘means more regulation’ of virtual currencies is on the way
Governments are concerned about the instability that virtual currencies can bring, and are likely to crack down further on their use particularly as a way of raising funds, according to a former US regulator
Cryptocurrency communities in Hong Kong and around the world will have to brace for greater regulation, as governments monitor the impact of digital currencies on the stability of financial systems, according to Bart Chilton, the former commissioner of the US Commodity Futures Trading Commission.
Speaking on the first day of Hong Kong Fintech Week 2017 on Monday, Chilton cited the volatility of the benchmark virtual currency, bitcoin, as a key worry.
In mid August, one bitcoin was worth less than US$3,000. By September 1 it was worth nearly US$5,000, but by September 14 the price had dropped back to US$3,200. Just over a month later, it surged to more than US$6,000.
“Look at what has happened to the price of bitcoin in the last few months. That is not a level of stability with which I would be comfortable as a regulator,” Chilton said. “If the fintech community doesn’t step up, that will compel regulators to take action.”
Chilton also said that greater regulation could be on the way for initial coin offerings, or ICOs, a popular means by which cryptocurrency projects raise funds.
“No one has come up with a regulatory regime that works yet,” said Chilton. He added that key concerns for ICOs included know-your-customer regulations and anti-money-laundering rules.