Brazil Central Bank warns about risk of virtual currencies

Brazil’s Central Bank President Ilan Goldfajn warned about the market risk of virtual currencies. “Virtual currencies, soaring as they are today—with no ballast, no one to regulate them—pose such risks that the Central Bank has issued a statement warning about them,” the president told journalists today (Dec. 13).

Goldfajn noted that these currencies have two purposes today: selling in the future—“It’s a bubble, a pyramid,” he said—and, second, using as a tool for illicit activities. “Using virtual currencies won’t protect anyone from penalties or punishment,” he cautioned.

The rising interest of economic agents in such currencies led the Central Bank to release a note on the risks of this kind of currency, which, in addition to not being issued, lacks guarantee from any monetary authority.

According to the Central Bank, virtual currencies may also not be guaranteed for the conversion of sovereign currencies, like the pound, “nor are they ballasted in real assets of any kind, so all the risks are all in the hands of the owners.” “Their value stem solely from the confidence given by individuals to its source,” the note reads.

Bitcoin

On November 29, bitcoin surpassed the $11 thousand threshold amidst fears its bubble would burst, leading to a sharp plunge in its value, which multiplied by ten in less than a year.

Translated by Fabrício Ferreira