Cryptocurrencies like bitcoin are not ‘mature’ enough to regulate: ECB chief

Cryptocurrencies are not “mature” enough to be considered by the European Central Bank (ECB) for regulation, the bank’s president Mario Draghi said on Thursday.

At a press conference last weekend, the ECB president addressed a question about the potential of cryptocurrencies like bitcoin.

“With anything that’s new, people have great expectations and also great uncertainty. Right now we think that especially as far as bitcoins and cryptocurrencies are concerned, we don’t think the technology is mature for our consideration,” Draghi said.

He expressed caution and said that while innovation should be “cherished for its potential benefits,” it should also be “critically assessed” for risks.

“One of the lessons of the great financial crisis is that financial innovation, in this case it’s financial and technology innovation… should be embraced with lots of attention to its potential risks,” Draghi told a room of reporters.

Last month, in a statement to the European Parliament’s Committee on Economic and Monetary Affairs, Draghi said the ECB did not have the authority to regulate cryptocurrencies.

Interest in cryptocurrencies has exploded in recent months with many seeing sharp rises in price. There are now over 1,000 virtual currencies and regulators across the world have differing views on them.

While Draghi appears to be taking a wait and see approach, China banned cryptocurrency exchanges. South Korea also put a stop to initial coin offerings (ICOs), a way for start-ups to raise money by issuing virtual tokens.

Meanwhile, Abu Dhabi recently ruled that bitcoin is a commodity in the same vein as precious metals or fuels. Therefore, it remains unregulated. Japan, however, has allowed companies to accept bitcoin as payments.

IMF Managing Director Christine Lagarde told CNBC that cryptocurrencies could cause “massive disruptions” and that the organization wants to be a part of how they develop in the future.

Source: CNBC