Bitcoin’s rising popularity will lead to more regulation, says Riksbank

The Riksbank is a Swedish government institution that makes sure the country’s monetary policy is in line with the nations interests, and right now it does not want to be the first to allow the use of a specific cryptocurrency. The Bank’s chief executive Stefan Ingves believes that users of the virtual currency Bitcoin can be targeted for taxation by their government, as they are not considered real currencies, but property. Bitcoin is meant to be used as an alternative form of payment, but it is controversial, the Bank says, as its volatility and high transaction costs make it hard to use, especially for small businesses.

The Swedish central bank is concerned that the digital currency Bitcoin could be used for illegal purposes. The Riksbank has admitted that it doesn’t have the full picture, but it is now seeking to gather as much information as possible on Bitcoin and digital money, so that it can form an opinion about issues such as money laundering, tax evasion and terrorism financing.

Many have hailed Bitcoin’s rising popularity. But not all welcome the cryptocurrency’s growth. The Riksbank, Sweden’s central bank, is one bank taking a dim view of Bitcoin. This week it published a report warning that Bitcoin could lead to more regulation, and was not suitable for everyone.. Read more about is cryptocurrency legal and let us know what you think.

The continued growth of cryptocurrencies and their increasing prevalence are forcing international monetary authorities to remain vigilant. Stefan Ingves, governor of Sweden’s central bank Riksbank, said in a new commentary this week that the growing popularity of digital assets worldwide is placing higher demands on regulators, central banks and lawmakers: When something becomes important enough, things like consumer interests and money laundering come into play. So there is every reason to believe that [the ordinances] will be enacted. Developing a regulatory framework for an asset originally designed to circumvent the architecture and rules of traditional finance itself is no easy task. In the United States, Randal Quarles, the Federal Reserve’s vice chairman for supervision, expressed concern that existing regulation of cryptocurrencies is inadequate and said that the Fed is currently examining how best to address the issue. Quarles’ comments came amid a week of volatility in crypto currency markets, with bitcoin (BTC) losing $15,000 in one fell swoop. At the same time, the EU has committed to a comprehensive framework to enable the adoption of distributed ledger technologies (DLTs) and cryptocurrencies in the financial sector by 2024, which also addresses the risks associated with the mass adoption of these technologies. In Sweden, Finance Minister Market Esa Lindhagen said the government is already working to tighten regulatory standards for cryptocurrency exchanges. Different approaches to regulating cryptocurrencies remain a dead letter internationally, she said. Ingwes himself noted that regulation of cryptocurrencies will likely come at different times and in different regions. However, on the very important issue of money laundering, Mr Lindhagen stressed the need for cross-border coordination between regulators around the world. While regulators ponder how to deal with the phenomenon of decentralized crypto assets, Sweden’s central bank is working to develop a central bank digital currency, e-krona. The proof of concept uses Corda, a distributed ledger technology solution from R3. Mr Ingwes has previously stated that the currency could be operational within five years.The Riksbank’s CEO Stefan Ingves has recently stated that it is time to draw a line under the debate surrounding bitcoin.  He believes the digital currency is a bubble and the time has come to introduce some kind of regulatory framework.  For Sweden, this could mean that Bitcoin is one step closer to being classified as a security, which would make it subject to the same regulatory requirements as any other financial instrument.. Read more about why is cryptocurrency valuable and let us know what you think.

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