A top multinational advisory firm has warned of increasing credible regulatory threats in the digital currency.
PricewaterhouseCoopers’ latest assessment of digital currencies in a report titled ‘Digital Disruptor: How Bitcoin is Driving Digital Innovation in Entertainment, Media and Communications’ on February 7 painted a gloomier picture – as the digital currency attempts to shake off its bad-boy image.
In recent months, unfavourable legal rulings among dominant and influential governments on the risks and illegality within the Bitcoin world – whilst aiming to be ‘cleaner than cash’ — have put businesses and consumers on the back foot.
Unintentionally, the latest report last Friday coincided with Russia declaring its opposition to Bitcoin, making it illegal, in a fresh revolt.
The report based its analysis on 3.4 million social media mentions the digital currency garnered last year.
“Like other consumer-facing technologies, companies experimenting with Bitcoin should monitor the evolving regulatory landscape and execute due diligence to mitigate potential exposure to illicit activities,” said the professional services firm.
It noted for companies and consumers there was growing uncertainty and evolving perspectives of regulators dampening the overall outlook.
An initial report on Bitcoin released by PwC on January 27 stated the key hurdles for Bitcoin to overcome is the infrastructure of consumer-friendly services, faster transaction processing, gaining support from lawmakers and a more aware and trusting public.
Some 11 days later, in light of little international support, PwC explained the new, key challenges ahead. “Bitcoin has many hurdles before it becomes mainstream, including an infrastructure of consumer-friendly services, regulatory hurdles, licensing regimes, governmental classification of the asset (commodity, security, asset or currency), as well as taxation, measurement and valuation.”
Canada and the Bank of France said last month that Bitcoin wasn’t legal tender – amounting to a blow for seeking legitimacy.
The report’s United-States-based authors also removed an opening paragraph reference to the “U.S. government approved digital currency.” In the later edition, it said Washington’s stance had changed and it neither has legal tender in the country.
One bitcoin user described the alteration as a ‘backpedal’.
In a US Senate hearing in November last year, regulators in Washington signalled it could embrace Bitcoin.
Representatives from the Department of Justice and financial regulator the Securities and Exchange Commission and comments from the FBI and US Federal Reserve initially indicated some support for Bitcoin with the advantages outweighing the negatives. The positive signals saw prices double US$300 (HK$2,327) to HK$5,584.
After the price spike in which Bitcoin almost reached parity with gold, the roller-coaster ride peaked and tumbled weeks later in early December last year after China barred financial institutions from doing business with the digital currency.
The effect of the edict all but choked off enthusiasm in the fastest growing – and lucrative – market.
The latest weighted price of a bitcoin across major exchanges is HK$5,359 at 13.23 on Monday. (Source: Coindesk)