BITCOIN prices could be under threat after two of Europe’s most powerful leaders have joined efforts to regulate the speculative cryptocurrency.
German Chancellor Angela Merkel met French President Emmanuel Macron to discuss regulating bitcoin after it was suggested that the token is “a risk for financial stability”.
Bitcoin prices suffered a crushing blow this week after South Korean regulators threatened to ban crypto trading, plummeting $83billion (£59.8billion) in value between Monday and Thursday alone.
Bitcoin investors now fear further regulation in Europe could adversely impact prices, which were trading at more than $12,700 (£9,163.43) at 11am on Saturday January 20.
Yves Mersch, member of the Executive Board of the European Central Bank, sparked concern last December after suggesting that bitcoin could become a genuine threat to finance.
He said: “Second, there are now banks which hold positions in bitcoin. It is a matter for the supervisors to judge how big the risks are.
“Third, and what concerns me most, is when financial market infrastructures such as stock exchanges enter this business. That poses a major threat to financial stability.”
But investors are now fearful that increased regulation could damage or even kill the bitcoin bubble.
Kenneth Rogoff, professor of economics at Harvard University, said last October that bitcoin’s price relies heavily on its anonymity – something that regulation could potentially do away with.
He said: “Were bitcoin stripped of its near-anonymity, it would be hard to justify its current price.
“Perhaps bitcoin speculators are betting that there will always be a consortium of rogue states allowing anonymous bitcoin usage, or even state actors such as North Korea that will exploit it.”
However fintech entrepreneur Andreas Antonopoulos argued that regulating bitcoin is a nigh-impossible feat.
He said: “The question is not whether bitcoin should be regulated, but whether it can be regulated. The reality is ‘No’. The rest is nostalgia.”
The Franco-German meeting took place last night in Paris.
French Finance Minister Bruno Le Maire also announced on Friday that Germany and France will present regulatory proposals at the upcoming G20 summit in Buenos Aires, this November.
The Minster said it was his Government’s “responsibility” towards his citizens to “reduce the risks” of bitcoin.
Last December, the UK joined the crackdown on bitcoin after it was revealed that the Treasury was ramping up its efforts to curb money laundering through cryptocurrencies.
However Joachim Wuermeling, member of the board of directors of the German Bundesbank, argued that regulating bitcoin will amount to nothing if not done on a global scale.
He said: “The effective regulation of cryptocurrencies will only be possible through the greatest possible international cooperation, because the regulatory power of the national states is obviously limited in the face of this new reality.”
Some are however welcoming the news of bitcoin regulation, seeing it as a positive step to legitimising it and curbing illegal use.
Christopher Keshian, managing partner and co-founder of $APEX Token Fund, argued that regulating bitcoin could be the first step to wiping away the stigma of bitcoin being fraudulent money.
He said: “We expect there to be increased regulatory action against legally ambiguous Initial Coin Offerings and perhaps even team members.
“There are a number of projects which raised excessive funding at irresponsible implied market cap prices (not a valuation) on legally questionable grounds.
“Frankly, we encourage a regulatory crackdown, in particular increased scrutiny on irresponsible and fraudulent ICOs and greater focus on cases against unregistered persons acting as agents, brokers, and investment professionals in the cryptocurrency space.”
Bitcoin opened on the markets today at $11,514.92 (£8,308.36) accordion to CoinDesk, 3.5 percent up on its Friday high of $11,936.97 (£8,612.88).