- The Washington Times - Monday, June 18, 2018

Unstable pricing, the potential for manipulation and their growing drain on the speed of the internet are casting major shadows over the future of digital currencies such as bitcoin, a major new survey by the Bank of International Settlements (BIS) has concluded.

“The associated communication volumes (associated with cryptocurrencies) could bring the internet to a halt,” warned a 24-page report published by the Basel, Switzerland-based BIS, which is often described as the central bank for central banks.

BIS authors also raised long-standing concerns echoed in Washington that cryptocurrencies are a hotbed of money-laundering activity and illegal financing used by terrorists, drug kingpins, white-collar criminals and Russian cybercriminals.

Known for its significant volatility, bitcoin over the past year has gone on an unprecedented price roller coaster ride positing values as high as $19,783 per bitcoin in December then plunging to $5,900 by February.

Researchers from the University of Texas at Austin last week released a report of findings which speculated that Tether, one of the most-traded cryptocurrencies, showed a pattern of being spent on bitcoin during pivotal moments of the price bubble to manipulate values.

The BIS report, issued on Sunday, includes a stark warning that cryptocurrencies cannot be regulated and trusted the way central bank-issued denominations can. Currency stability is a problem, made even worse by “the absence of a central issuer with a mandate to guarantee the currency’s stability,” the BIS report said.

Another problem — that virtual money is produced — or “mined” by banks of computers then freely traded online. Because banks of computers solving complex algorithms verify the existence of currencies like bitcoin, the possibility exists for a global battle over computer storage capacity to overwhelm the entire internet.

Last summer, the U.S. Treasury’s Financial Crimes Enforcement Network (FinCEN), the Department of Justice and scores of European illicit finance law enforcement officials launched a wave of operations against Russian cybercriminals, shuttering numerous “dark web” contraband marketplaces rife with the illegal sale of guns, drugs and other forbidden merchandise.

On Wall Street, JPMorgan Chase CEO Jamie Dimon has dismissed bitcoin as a “fraud,” while Treasury Secretary Steven T. Mnuchin has expressed concern that bitcoin has fueled activity in illegal online marketplaces.


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