news ANALYSIS

Regulations could be brutal for cryptocurrencies, speculates Amundi

25 March 2021

I

nevitable crypto regulations could be “brutal” for cryptocurrencies, Amundi has argued in its latest blue paper – Crypto-currencies: a bubble or the emergence of a new paradigm in decentralised finance?

According to the report from Europe’s largest asset manager, G7 regulators are determined to regulate the cryptocurrency (CC) ecosystem, leading to potentially severe price adjustments.

However, such changes would be temporary, and CCs would likely flourish again once the regulatory environment is clear.

Authored by Aundi CIO, Pascal Blanqué, and deputy CIO, Vincent Mortier, the report recognises the growing popularity of cryptocurrencies which promise a more inclusive form of finance.

Indeed, demand for CCs now extends beyond retail investors, with increasing activity from institutional investors and investment funds. The report provides the case of Tesla, which, in early February this year, acquired $15bn bitcoins.

Blanqué and Mortier call for the introduction of an “appropriate regulatory framework” that will simultaneously capitalise on the development of CCs whilst ensuring the entire financial system is not put at risk.

Yet there a several challenges surrounding the regulation of CCs. Using Bitcoin as an example, Blanqué and Mortier explain: “Bitcoin has no intrinsic return and there is no natural protection against capital loss, which raises the question of its fair value.”

According to the duo, CCs cannot be classified as money, because they do not posses the three qualities that have characterised money: a unit of account, a store of value and a medium of exchange.

With the ability to identify motives for ownership, but lacking the ability to rank them, Blanqué and Mortier add: “It is not possible to estimate the potential demand for these assets unless assumptions are made about the precise role they will play in the future.”

Go to article: Home | How are private banks, new and old, attracting new wealth?Go to article: Editor's noteGo to article: ContentsGo to article: BriefingGo to article: News in briefGo to article: Lombard Odier expands into Brazil with officeGo to article: Regulations could be brutal for cryptocurrencies, speculates AmundiGo to article: $3.8trn pumped into fossil fuels by banks since the Paris AgreementGo to article: Barclays Private Bank expands in France and ItalyGo to article: FeaturesGo to article: LGBT+ lens investing: progress to deliver huge returnsGo to article: Investments are risk vs return, so why are “lottery” investments going out of faGo to article: Wealth has met wellbeing and both are growingGo to article: The remaining hurdles on the road to sustainable financeGo to article: AnalysisGo to article: ESG to drive cryptocurrency transformation Go to article: People MovesGo to article: The robot will see you now [error #404#]!Go to article: The PBI team