BIS Chief Fears "Systemic Threat" Of Bitcoin, Urges "Pre-emptive Action" From Authorities

“Bitcoin is not functional as a means of payment, but it relies on the oxygen provided by the connection to standard means of payments and trading apps that link users to conventional bank accounts,” Carstens said in Frankfurt on Tuesday.

“If the only ‘business case’ is use for illicit or illegal transactions, central banks cannot allow such tokens to rely on much of the same institutional infrastructure that serves the overall financial system and freeload on the trust that it provides.”

Simply put, Carstens argues that there is a "strong case" for authorities to rein in digital currencies because of their links to the established financial system...

“If authorities do not act pre-emptively, cryptocurrencies could become more interconnected with the main financial system and become a threat,” he said.

“Most importantly, the meteoric rise of cryptocurrencies should not make us forget the important role central banks play as stewards of public trust..."

"Private digital tokens masquerading as currencies must not subvert this trust.”