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Governments world wide may begin to clamp down on the use of bitcoin and different cryptocurrencies, the CEO of a top crypto exchange has warned.
A quantity of officers — from U.S. Treasury Secretary Janet Yellen to European Central Bank President Christine Lagarde — have sounded the alarm concerning the use of bitcoin for cash laundering, terrorist financing and different unlawful actions.
“I believe there may be some crackdown,” Jesse Powell, CEO of Kraken, advised CNBC in an interview. Cryptocurrencies have surged in worth recently, with bitcoin hitting a report excessive value of greater than $61,000 final month. The world’s most respected digital coin was final buying and selling at round $60,105.
Kraken is the world’s fourth-largest digital foreign money exchange in phrases of buying and selling quantity. The agency is contemplating going public via a direct itemizing — much like Coinbase — subsequent 12 months after attaining report buying and selling volumes within the first quarter, CNBC reported final week.
Coinbase is set to go public on Wednesday, and will be valued at as a lot as $100 billion — greater than main exchange operators like Intercontinental Exchange, proprietor of the New York Stock Exchange. Crypto traders are hailing the corporate’s inventory market debut as a main milestone for the business after years of skepticism from Wall Street and regulators.
Still, Kraken’s chief thinks regulatory uncertainty round crypto is not going away any time quickly. A latest anti-money laundering rule proposed by the U.S. authorities would require individuals who maintain their crypto in a personal digital pockets to endure identification checks in the event that they make transactions of $3,000 or extra.
“Something like that would actually damage crypto and sort of kill the unique use case, which was to only make monetary companies accessible to everybody,” he mentioned.
Cryptocurrencies like bitcoin have usually been related to illicit actions attributable to the truth that individuals transacting with it are pseudonymous — you may see the place funds are being despatched however not who despatched or obtained them.
There are indicators that the use of crypto for nefarious functions may be falling. Illicit exercise accounted for just 0.34% of all crypto transaction volume final 12 months, in line with blockchain evaluation agency Chainalysis. That was down from roughly 2% a 12 months earlier.
“I hope that the U.S. and worldwide regulators do not take an excessive amount of of a slender view on this,” Powell mentioned. “Some different international locations, China particularly, are taking crypto very severely and taking a very long-term view.”
Kraken’s CEO mentioned he feels the U.S. is extra “short-sighted” than different nations and “vulnerable” to the pressures of incumbent legacy companies — in different phrases, the banks — that “stand to lose from crypto changing into a large deal.”
“I additionally suppose it would be too late,” Powell added. “Maybe the genie’s out of the bottle and simply making an attempt to ban it at this level would make it extra engaging. It would definitely ship a message that the federal government sees this as a superior various to their very own foreign money.”
The U.S. is not the one nation contemplating strict new guidelines on crypto. In India, for instance, the federal government is considering a law that would ban cryptocurrencies and penalize anybody holding or buying and selling them.
