Anti-Privacy Regulations Pose Risks for Crypto Investors, Bank of America Says

Anti-Privacy Regulations Pose Risks for Crypto Investors, Bank of America Says

A Bank of America cryptocurrency report warns of the risks and potential market disruption from anti-privacy government measures.

Cryptocurrencies “challenge the ability of governments to levy taxes and to control capital flows more broadly,” according to a recent report from Bank of America Securities obtained by CoinDesk. Uncertainty over how the U.S. governments will act to limit these use cases presents an key risk for cryptocurrency investors.

“Encrypted private wallets with digital assets that can be transferred across borders would seem to undermine

the monetary sovereignty of every nation-state,” the report says.

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In an “extreme case,” regulators could simply ban all institutions and intermediaries from transacting with cryptocurrencies. Or the government could increase customer information reporting and access requirements for cryptocurrency exchanges, which the report describes as a more plausible possibility.

Also, support for central bank digital currencies (CBDCs) are not “just a form of payments competition,” the report says. “They are also an effort to replace private digital assets with publicly-controlled ones.”

How effective state-run counter-privacy measures will be is a separate question. The authors admit that no matter how burdensome, anti-privacy regulatory changes “might instead be meaningless”. Users committed to transaction privacy “could potentially create a second ‘truly private’ wallet to which they send currency from their now-public wallet, and continue to make anonymous cross-border transactions.” “At some threshold, banning private digital assets would become too politically risky, too disruptive to constituents,” the report says. But carefully targeted regulations designed to restrict privacy could impose a “serious burden” on users.

Crypto is here to stay, but bitcoin is in a ‘massive bubble’: Rosenberg

Crypto is here to stay, but bitcoin is in a ‘massive bubble’: Rosenberg

Cryptocurrencies are here to stay but impossible to value: David Rosenberg

Bay Street veteran David Rosenberg isn’t buying into the hype swirling around bitcoin.

In a television interview, Rosenberg, chief economist and strategist at Rosenberg Research & Associates Inc., said that while cryptocurrencies are here to stay, there’s no rational explanation for the massive run-up in the price of bitcoin.

“Crypto is here to stay. It has a function in the capital markets. But valuing it is next to impossible,” he said. “So all you really have to do is look at the price, and look at the chart, and you can see it’s a massive price bubble. The chart itself is telling you that.”

Bitcoin prices briefly eclipsed the US$48,000-per-coin mark on Tuesday, marking a new record high. The most recent run was buoyed by Tesla’s disclosure it had bought US$1.5-billion worth of the cryptocurrency and had plans to begin accepting it as payment for its electric vehicles.

BNN BLOOMBERG POLL:

Do you agree with the Bank of Canada that there’s a “speculative mania” in cryptocurrencies? — BNN Bloomberg (@BNNBloomberg) February 10, 2021

While the cryptocurrency has found itself a high-profile fan in the form of Tesla Chief Executive Officer Elon Musk, Rosenberg said a continued run higher is a matter of faith on the part of bitcoin acolytes, not a matter of fundamentals.

“In three words or less: Greater fool’s theory. You’re buying bitcoin on the assumption that some bigger fool is going to buy it at a higher price,” he said. “The question you have to ask yourself is: ‘How do you value bitcoin?’ It’s not a stock. You can’t do any cash-flow analysis.”

Rosenberg’s criticisms come the same day Bank of Canada Deputy Governor Timothy Lane dismissed the recent boom in cryptocurrencies as a “speculative mania.” He argued the digital tokens don’t have the qualities necessary to become the currency of the future, given the volatile price moves.

“The recent spike in their prices looks less like a trend and more like a speculative mania – an atmosphere in which one high-profile tweet is enough to trigger a sudden jump in price,” Lane said.

While the central bank has been studying the circumstances that could lead it to launching a digital loonie, should the need present itself, Lane said that such a scenario is by no means a certainty.

“Our view remains unchanged: A digital currency is by no means a foregone conclusion.”

Dogecoin? A lot of ‘retail punters are going to lose money,’ says crypto expert

That’s Nic Carter on CNBC on Wednesday explaining the potential perils of piling into dogecoin, as a number of celebrities and captains of industry have been touting the cryptocurrency that was created as a joke back in 2013.

Read: Should I buy dogecoin? Why prices of the cryptocurrency are surging—but risky

Carter underscored to CNBC’s Europe…