After a volatile year, mainly marked by growth, the world’s first digital currency fell back below $A67,000 early on Friday morning for the first time since early October.
This occurred after the International Monetary Fund based in Washington said cryptocurrencies were a financial risk.
While Australia is preparing to regulate cryptocurrency trading platforms, the IMF is skeptical about the ability of individual national governments to crack down on dubious activity.
‘Policymakers struggle to monitor risks from this evolving sector, in which many activities are unregulated,’ it said in a blog post.
‘In fact, we think these financial stability risks could soon become systemic in some countries.’
Bitcoin has continued to plunge as the Australian government prepares for a crackdown on cryptocurrencies – with the IMF doubtful about a national approach
The IMF wants the Financial Stability Board, established at the London G20 summit in 2009 during the Global Financial Crisis, to regulate cryptocurrencies.
‘Crypto’s cross-sector and cross-border remit limits the effectiveness of national approaches,’ it said.
‘Countries are taking very different strategies, and existing laws and regulations may not allow for national approaches that comprehensively cover all elements of these assets.’
Only a month ago, Bitcoin was worth $91,000 with Finder co-founder Fred Schebesta predicting it would reach $100,000 by mid-November.
While that prediction didn’t materialise, Bitcoin’s value even now is triple the $24,000 level of a year ago.
Investors, however, face uncertainty over crypto trading platforms with major exchange MyCryptoWallet this week appointing administrators.
Treasurer Josh Frydenberg has announced new rules next year will regulate cryptocurrency trading and buy now, pay later apps in the biggest shake-up of Australia’s payment system since the mid-1990s.
A general distrust of banks has seen more than 800,000 Australian investors put their money into crypto since 2018.
After a volatile year, mainly marked by growth, the world’s first digital currency fell back below $A67,000 early on Friday morning for the first time since early October after the International Monetary Fund issued a warning. While Australia is preparing to regulate cryptocurrency trading platforms, the IMF is skeptical about the ability of individual national governments to crack down on dubious activity
Treasury will begin putting together a licensing system for digital currency exchanges, with policy idea flagged on Wednesday just five weeks after a Senate committee on financial technology recommended regulating that sector.
Crypto changes in 2022
LICENSING: New regulations would cover digital currency trading platforms
CENTRAL BANK DIGITAL CURRENCY: Government exploring the idea of a retail central bank digital currency in Australia
REGULATION: Treasury argued Australian regulation was needed so Australian businesses and consumers weren’t governed by foreign government and big corporation rules
Canberra bureaucrats will also be exploring the idea of a central bank digital currency, with recommendations by the end of next year.
Australian Taxation Office figures showed 819,000 Australians have bought a cryptocurrency since 2018, with the number of transactions in 2021 increasing by 63 per cent compared with 2020.
The Council of Financial Regulators – comprising Treasury, the Reserve Bank of Australia, the Australian Prudential Regulation Authority and the Australian Securities and Investments Commission – will be providing recommendations by mid-2022.
The volatility has prompted Reserve Bank of Australia Governor Philip Lowe to urge investors to be careful about investing in cryptocurrencies.
‘Anyone purchasing these assets should take care,’ he told the Australian Payments Network Summit on Thursday.
‘There is still a lot of uncertainty about the long-term usefulness of these assets.
‘Before investing, it is best to understand fully the underlying value proposition.’
Last month Tony Richards, the head of the Reserve Bank of Australia’s payments policy section, warned cryptocurrency prices could crash.
Treasurer Josh Frydenberg has announced new rules in 2022 that would regulate cryptocurrency trading and buy now, pay later apps in the biggest shake-up of Australia’s payment system since the mid-1990s
‘There are plausible scenarios where a range of factors could come together to significantly challenge the current fervour for cryptocurrencies, so that the current speculative demand could begin to reverse, and much of the price increases of recent years could be unwound,’ he said.
In May, Bitcoin lost a third of its value within a week, plunging from $74,000 to $50,000, after billionaire Tesla founder Elon Musk changed his mind on accepting Bitcoin as payment for his electric cars.
The 50-year-old tycoon argued cryptocurrency mining, creating Bitcoin by solving complex mathematical puzzles, used too many fossil fuels and his declaration causing a 16 per cent plunge in just one day.