Cryptocurrencies might affect financial stability, cryptomining requires significant electricity, and their decentralized nature and high confidentiality make them tools for money laundering, central bank Deputy Governor Chen Nan-kuang (陳南光) told a forum in Taipei on Tuesday.
However, there is no consensus among countries on how to regulate cryptocurrencies, Chen said.
Some countries have banned virtual coins completely, while others, including Taiwan, merely regulate them, he said.
Photo: Allen Wu, Taipei Times
Cryptocurrency values fluctuate greatly, although their values have continued to break records.
The fast development of cryptotrading and their rising value have prompted regulators to take a hard look at them for fear of the systemic implications they might have on security, governance, consumer protection, supervision and impact on monetary policy, DBS Bank Ltd said in a report yesterday.
China and India, for instance, have taken tough steps to limit cryptomining and transactions, the report said.
Chen said he is examining what rules should be implemented to regulate cryptocurrencies without hurting the innovation they provide.
Former World Bank lead economist Paul Romer, who also participated in the forum via videoconference, said he did not think that cryptocurrencies have any value and are not a useful innovation, as digital transactions are already viable in financial systems.
Furthermore, it is difficult to trust cryptocurrency systems set up by people under no regulations or supervision, Romer said.
The cryptocurrency trend is a mere bubble and does not have any advantage unless someone can prove that it has social value, Romer said, adding that only early-stage investors benefit in a bubble.
Chen said he agreed with Romer, but he could not ban cryptocurrencies.
Their development is based on blockchain technology, Chen said.
As blockchain is expected to be used in areas other than building virtual assets, the government should allow the technology to develop, he said.
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