Joseph Stiglitz, the former chief economist of the World Bank has warned the crypto community central banks have not yet clamped-down on bitcoin and other leading coins because the market is still relatively small.
The Columbia University professor told Financial News that once crypto “becomes significant” they will “use the hammer”.
He said: “People in power will move to regulate anonymous transactions. That you can be sure of.
“Bitcoin could easily be worth just $100 in 10 years.”
Professor Stiglitz says that the main problem with bitcoin and other decentralised cryptocurrencies comes from the conflict between the near anonymity for users and the necessary transparency needed for a banking system.
He said: “You cannot have a means of payment that is based on secrecy when you’re trying to create a transparent banking system.
“If you open up a hole like bitcoin then all the nefarious activity will go through that hole, and no government can allow that.”
On the need for regulation, industry onlookers are in agreement that changes are needed and new rules would help bring in the next wave of investment from big bank and institutional investors.
However more shocking losses are expected to surface, leaving risk-adverse money markets unsure over what’s often dubbed a ‘wild west’ for investors.
According to new data from cybersecurity firm CipherTrace, $761 million has been stolen from digital currency exchanges so far this year compared to $266 million for the whole of 2017.
Yet in the UK, trust in the exciting new technology appears to be on the up with recent discussion in the UK being described as a “model example” for how regulation should be fashioned.
Last week MPs heard from a Treasury select committee on the potential for fraud, money laundering, hacking, crypto-jacking and phishing in the crypto space.
The meeting has been viewed by industry onlookers as a positive step, and Kevin Murcko, CEO of cryptocurrency exchange CoinMetro argued that the Treasury hearing “set the right tone for the future of crypto-assets in the UK – one that reconciles the risks and benefits of the asset.”
During the hearing Director Donald Toon, Prosperity Command at the National Crime Agency, told MPs that the use of crypto-assets in money laundering was minimal, and that it paled in size to other laundering strategies. While Martin Etheridge, Head of Note Operations at the Bank of England, argued that crypto didn’t pose a threat to financial stability.
Mr Murcko said: “The UK is setting a model example for how regulation should be fashioned.
“We heard today from the FCA, the Treasury, and the Bank of England – all experts on finance and crypto-assets. Around the world, we need subject specialists like these stepping forward to counsel governments on their approach to crypto-assets.”
Alexey Burdyko, CEO and Founder of Play2Live told Express.co.uk that cryptocurrency lacks “trust” and “without trust you’re always going to be one step behind.”
He said: “Once we begin to see more regulation enter the cryptocurrency market, we will begin to see the a further rise in the market.”