The World Bank has joined the chorus of central banks around the globe on financial risks associated with cryptocurrencies. The US-based international financial institution has cautioned the banking sector against bitcoin business saying it is "dangerous" to the global financial system.
According to World Bank Group senior vice president Mahmoud Mohieldin, there is a need for central banks to have regulations to protect consumers from using Bitcoin, so as to create trust among those using their financial systems, Kenya Broadcasting Corp reported Wednesday.
Mohieldin said there is a strong case for authorities to rein in digital currencies because their links to the established financial system could cause disruptions, according to the report.
The meteoric rise in cryptocurrencies such as Bitcoin and Ethereum has caught regulators flat-footed, leaving them in an awkward situation: adopt or ban them.
Recently, the Reserve Bank of India had banned all banks from dealing with or providing services to any individual or business entity dealing with or settling virtual currencies.
The central bank has declared that it does not consider bitcoins and others as legal tender but that's apparently not enough to keep investors off bitcoins.
Bulls say that Bitcoin's boom is far from over and that there's more to analyzing a market than just measuring price gains. While the recent tumble has alarmed some investors, the cryptocurrency has bounced back from several previous swoons.
Billionaire venture capitalist Tim Draper, who is one of the earliest investors, believes countries will benefit a lot from adopting cryptocurrencies and blockchain as it will enable governments to become more transparent and efficient.