BANDAR SERI BEGAWAN – The Autoriti Monetari Brunei Darussalam (AMBD) has joined regulators around the world by issuing caution on the risks of cryptocurrencies such as Ethereum and Bitcoin, as the latter’s value tumbled by 30 per cent overnight, prompting fears of the effect on financial markets if the Bitcoin bubble bursts.
“The recent rapid escalation in the value of certain cryptocurrencies, including Bitcoin, is driven by high speculation and there is no clear sense of the fundamental value of these cryptocurrencies,” the central bank said in a statement on Friday.
“The risk of losing its value is high and without any regulatory safeguards, members of the public are not protected under the laws administered by AMBD.”
Cryptocurrencies are often traded anonymously using platforms unregulated by central banks, hence are susceptible to misuse and illegal activity.
AMBD reminded the public that digital currency is not legal tender in Brunei and urged people to practise due diligence before dealing in cryptocurrency.
“It is also highly susceptible to cybersecurity risks evidenced by several high profile thefts involving the hacking of organisations in the cryptocurrency network… The international communities remain vigilant and AMBD will continue to closely monitor the development of issues surrounding them,” it added.
Bitcoin’s value has risen by more than 1,500 percent this year, but prices have declined from their peak, and there are fears that a deeper plunge may reverberate around financial markets.
Earlier this week, Seoul-based Youbit, a Bitcoin exchange, filed bankruptcy after being hacked. The incident brings to global attention the dangers of cashing in on the recent boom of digital currencies. It was reported that cyber-thieves stole nearly a fifth of Youbit’s client holdings on Tuesday.
Meanwhile, on Friday the value of most cryptocurrencies continued to nosedive, with Bitcoin tumbling 30 per cent. The cause of depreciation is still unknown, due in large part to the lack of transparency and regulation surrounding cryptocurrencies.
Asian countries such as China, Indonesia and Vietnam have taken a stand against virtual currency, with plans to ban financial institutions from dealing in them.