The CEO of a top Bitcoin exchange warns of a possible crackdown on cryptocurrencies
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Governments around the world could start curbing the use of Bitcoin and other cryptocurrencies, the CEO of a top crypto exchange warned.
A number of officials – from US Treasury Secretary Janet Yellen to European Central Bank President Christine Lagarde – have sounded the alarm over the use of Bitcoin for money laundering, terrorist financing and other illegal activities.
“I think there could be a crackdown,” Kraken CEO Jesse Powell told CNBC in an interview. Cryptocurrencies have been appreciating recently, with Bitcoin hitting a record price of more than $ 61,000 last month. The world’s most valuable digital coin traded at around $ 60,105 last Monday.
Kraken is the fourth largest digital wallet in the world by trading volume. The company is considering going public via direct listing next year – much like Coinbase – after hitting record trading volumes in the first quarter, CNBC reported last week.
Coinbase is expected to go public on Wednesday and could be worth up to $ 100 billion – more than major operators of trading venues like Intercontinental Exchange, owners of the New York Stock Exchange. Crypto investors are hailing the company’s public debut as a major milestone for the industry after years of skepticism from Wall Street and regulators.
Even so, Kraken’s boss believes the regulatory uncertainties surrounding crypto won’t go away anytime soon. A recent anti-money laundering rule proposed by the U.S. government would require people keeping their crypto in a private digital wallet to undergo identity checks when making transactions worth $ 3,000 or more.
“Something like this could really hurt crypto and kill the original use case which was to make financial services accessible only to everyone,” Powell said.
Cryptocurrencies such as Bitcoin have often been associated with illegal activity because people who do business with them are pseudonymous. You can see where funds are being sent but not who sent or received them.
There is evidence that the use of crypto for nefarious purposes may decline. According to blockchain analytics firm Chainalysis, illegal activity only made up 0.34% of total crypto transaction volume last year. That was a decrease of around 2% in the previous year.
“I hope the US and international regulators don’t have too narrow a view on this,” Powell said. “Some other countries, especially China, take crypto very seriously and have a very long-term perspective.”
Krakens CEO said he believed the US was “more short-sighted” than other nations and “vulnerable” to pressure from legacy incumbents – in other words banks – who “could lose if crypto becomes a big deal” .
“I also think it might be too late,” added Powell. “Maybe the genie is out of the bottle and trying to ban it at this point would make it more attractive. It would certainly send a message that the government sees this as a superior alternative to their own currency.”
The US isn’t the only country considering tough new rules for crypto. In India, for example, the government is considering a law banning cryptocurrencies and penalizing anyone who holds or trades them.