Bitcoin price slides amid EU call to make transfers traceable, and rise of ‘stablecoins’
Bitcoin has slipped below $30,000 as calls grew among regulators in the US, Europe and Asia for tighter checks on cryptocurrencies, and the less volatile digi-currency known as “stablecoins”.
Bitcoin, the world’s largest cryptocurrency fell as much as 5% to $29,300, its lowest since 22 June, and investors said it was likely to test the $28,600 level touched last month, its lowest since early January, as it faced a variety of regulatory headwinds. Smaller cryptocurrencies such as ether and XRP also lost around 5%.
On Tuesday, European regulators outlined plans to make cryptocurrencies more traceable as part of a wider crackdown on money-laundering in the bloc.
The European Commission said companies handling virtual assets, such as bitcoin, should become subject to anti-money laundering rules, along with transparency requirements for transfers of crypto assets.
For example, a company such as a bank handling cryptocurrencies for a client would be required to include their name, address, date of birth and account number, and the name of the client. Anonymous crypto-asset wallets would also be outlawed. The proposals could take two years to become law.
Part of a wider crackdown on money laundering, the European Commission said: “Given that virtual assets transfers are subject to similar money-laundering and terrorist-financing risks as wire funds transfers ... it therefore appears logical to use the same legislative instrument to address these common issues.”
On Monday, US Treasury secretary, Janet Yellen, told regulators the US government must move quickly to establish a regulatory framework for stablecoins, a rapidly growing class of digital currencies.
A meeting of the nation’s top regulators agreed that stablecoins – a type of digital currency that is pegged to established currencies such as the US dollar – had the potential to be a useful means of payment. However, more regulation would be needed to protect stablecoin users and the wider financial system.
“The secretary underscored the need to act quickly to ensure there is an appropriate US regulatory framework in place,” the Treasury reported.
Neil Wilson, strategist at CMC Markets in London, said the price signals on bitcoin were “horrid” and he expected the currency to fall further after “taking a beating” on Tuesday.
Bitcoin has been locked in a relatively tight trading range in recent weeks, after investors sold heavily in May and June following a crackdown by China on cryptocurrency mining and trading.
ButTuesday’s fall took its losses for the month to around 15%. It has fallen by more than half since hitting a peak of almost $65,000 in April.
Bob Seeman, a tech entrepreneur and author of the book Bitcoin: Unlicensed Gambling, said governments would begin to use existing licensing laws to combat what he called the bitcoin “Ponzi scheme”.
“I believe that regulation will eventually overwhelm bitcoin,”he said. “Some governments may soon realise that they already have gambling license requirements in place to regulate and collect tax as a result of every bitcoin transaction having any connection to the government’s jurisdiction.”