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Watchful BB bands with banks to face crypto craze

Many countries opening exchanges for virtual money market, BD seems dazed by the new development on financial front

Jasim Uddin Haroon | January 04, 2018 00:00:00

Dazzled by the advent of cryptocurrency, a digital asset designed as a medium of exchange in transactions on virtual money market, Bangladesh's central bank began to devise ways of dealing with it.

People familiar with the development at the Bangladesh Bank (BB) told the FE Wednesday that at least three departments of the central bank got down to working together on the matter as they believe there is "huge craze over the virtual money mostly in Dhaka and Chittagong".

They also believe that there is huge scope for money laundering through such type of frantic trading transcending physical frontiers.

The bankers said they had already advertised in all leading media outlets warning people against sale-buy of such currencies, as part of preventive steps to curb the enthusiasm over the phantom.

For the first buy there is need for hard currencies like the dollar to purchase from nearby ones. Currently, there are nearly 1,400 such virtual currencies with Bitcoin topping the list. It is followed by such other digital currencies like Ethereum, Ripple, and Tether.

One Bitcoin, as of January 02, was equivalent to US$14678, according to Bitstamp, an international exchange on such virtual money bazaar. The exchange rate surged by over 39 per cent at 4:18pm BST Wednesday.

The market cap of all 1,386 currencies stood at $695,946,693,108 at 4:09pm Bangladesh Standard Time (BST) Wednesday, according to cryptocurrency.

Meanwhile, the BB has planned to work with all scheduled banks shortly to decide on how to restrain people and protect their interests.

Besides, the regulator has been working with the government agencies to detect the traders as it believes that its main role is to protect the interests of depositors.

"It has no issuer and for this reason cannot sustain," said one official at the BB, who has been working on it for long.

The people at the BB said there is none to apply to launch exchange in the country for conducting trading in the aerial securities.

"We never accept exchange to trade such "baseless" currency," said one official at the Foreign Exchange Policy Department of the central bank.

However, there are many countries and Chicago market operators CME and Cboe Global Markets that launched Bitcoin futures.

There are over a thousand outlets including Microsoft that accept such currencies. One airliner also accepts it.

On Cboe, futures volumes surpassed 10,000 Bitcoin equivalents, more than double any previous day since their launch on December 10 last, coinmarket.com said.

However, economists have a divergence of opinion over the issue: some argue that it should be dealt with stringently while some others argue that such currency may win the hearts of people in the end.

Dr Ahsan H Mansur, executive director at the Policy Research Institute of Bangladesh (PRI), told the FE there is no central bank so there is no controlling authority.

"I don't understand where the money goes as it needs dollars or such valuable currencies to buy a coin initially," he said about the riddle surrounding the open-sky money market.

"We live in a country where people go by rumours. So if the mass people involve themselves in such trading, how the country will handle?" he questioned.

There are many "bit-curious" people in the country as elsewhere around the globe but it now needs to be dealt with stringently.

Dr AK Enamul Haque, a professor of Economics and executive director at the Asian Centre for Development, also pointed out that cryptocurrency has no central bank and no regulator either. "Some people trust it and they transact through it."

Dr Haque, however, mentioned that many countries now made a move to legalise the encoded currency.

"This is a question to all central banks: will we remain outside the legal framework in future or not?"

The economics professor hastened to offer the answer to his own rhetorical question: "To my mind, it will come under legal framework in future." He foresees that there will be changes in future.

Bitcoin, created in 2009 as an offshoot of the financial world, was the first decentralised cryptocurrency. Since then, numerous other cryptocurrencies have been invented. These are frequently called altcoins, as a blend of bitcoin alternatives.

However, Bitcoin suffered its biggest blow as many watch warnings spooked its frantic investors in the last week of December, but it later recovered some lost ground.

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