Diane Abbott has hinted at launching a crackdown on Bitcoin and other cryptocurrencies if Labour gets into power.
The Shadow Home Secretary said virtual coins are used to finance terrorism and compared them to a Ponzi Scheme, the name for a scam in which money generated from old investors is given to new ones to give the impression of gigantic growth.
Bitcoin and all the other cryptocurrencies are in the spotlight right now after its price soared to almost $20,000 in December 2017 before collapsing by up to 70% this year.
‘We are looking at the Bitcoin issue. One of the problems with Bitcoin is the extent to which it is just a gigantic Ponzi scheme,’ she said in an interview with The House.
‘And if everyone took their Bitcoin money and tried to buy a new car all at once the whole thing would collapse.
‘So, we are worried about the extent to which Bitcoin is a Ponzi scheme but we are certainly worried about how in the here and now it is being used to fund terrorist activity and that is something we are looking at.’
Bank of England Governor Mark Carney also launched a scathing attack on cryptocurrencies today and called for regulation to make sure they abide by the ‘same standards as the rest of the financial system’.
In a speech delivered to the inaugural Scottish Economics Conference in Edinburgh, Mr Carney branded cryptocurrencies a failure’ and said they exhibit the ‘classic hallmarks of bubbles’.
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He said: “The prices of many cryptocurrencies have exhibited the classic hallmarks of bubbles including new paradigm justifications, broadening retail enthusiasm and extrapolative price expectations reliant in part on finding the greater fool.
‘At present, crypto-assets raise a host of issues around consumer and investor protection, market integrity, money laundering, terrorism financing, tax evasion, and the circumvention of capital controls and international sanctions.’
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