-Future of crypto-currencies largely unknown
The only certainty about crypto-currencies is that the future of such currencies is largely unknown. Despite the promising high yields, the purpose and use of the currency have been overshadowed by illegal activities mainly on the dark web.
Bitcoin last week dropped 30 percent in value to $8,291.87, its worst week since April 2013 compared to the highs seen last November at $19,000. Although crypto-currencies have made very high yields for some, its massive fluctuations in value are not a choice for more risk-averse investors looking for secure income. Large global institutions have further hampered the future of this currency, one by one, triggering limits on its use.
According to Bloomberg’s report last week, the Bank of America, JP Morgan Chase and Citigroup each confirmed to Bloomberg that they would halt digital currency transactions in their credit cards. The Bank of America’s spokesperson said, however, the bank’s customers could still use debit cards for crypto-currency purchases. Facebook also announced that it would block any advertising promoting crypto-currency products and services last week – a controversial stance given that the company welcomes emerging technologies. Consequently, the headwinds for crypto- currencies are getting stronger over the last few weeks.
Last month, in an interview with Bloomberg TV at the World Economic Forum, the U.K. Prime Minister Theresa May said that action against digital currencies might be required 'precisely because of the way they are used, particularly by criminals.'
'In areas of crypto-currencies, like Bitcoin, we should be looking at these very seriously,' she added.
In December, the Metropolitan Police also said that criminals are using crypto-currency cash machines to launder money in London. Last month, the U.K. treasury also noted that anti-money laundering regulations should be updated to include crypto-currencies. Moreover, on Monday, Feb. 5, Lloyds Banking Group banned its customers from buying Bitcoin and other crypto-currencies through their credit cards. The decision will affect 8 million credit cards holders of subsidiaries of the banking group including, Lloyds Bank, Bank of Scotland, Halifax and MBNA.
On Monday, Feb. 5, the BBC reported that a Lloyds spokeswoman said, 'We continually review our products and procedures and this is part of that.'
The dark web, which is used for money laundering or financing illegal activities, seems to embrace many different types of crypto-currencies. Following the recent popularity of Bitcoin, some recent reports, including Bloomberg’s report on Jan. 2, reveal that users of the dark web now prefer the monero, which is designed to avoid tracking.
One way or another, regulators around the world are realizing the risks of uncontrolled crypto currencies and are preparing to impose some limitations and controls over it. Although there are advantages to new innovative products using the latest technology, they are outweighed by illegal activities that need to be tackled.