The FINANCIAL — After a long silence the National Bank of Georgia has joined the list of countries whose national banks expressed themselves on cryptocurrency industry. The sector, at large, remains unregulated on the global scale. Therefore, due to their lack of stability, they present high financial risks for their customers, it said. NBG’s response on The FINANCIAL request on commentary three months ago was that “at that particular point, cryptocurrencies had minor influence on traditional currencies. However, rapid growth of market capitalization and the popularity of cryptocurrencies could change the situation. That is why they were monitoring the situation closely and were ready to intervene”.
Since then, cryptocurrency industry has grown more than fourfold, with the market cap hitting 622 billion dollars as of December 20th, 2017, up from the 150-billion-dollar figure in September.
National Bank of Georgia is yet to announce any legislative measures on cryptocurrency industry. However, today, on 20th December, 2017, they issued a statement warning the citizens on dangers presented by this highly volatile market.
“Lately, cryptocurrency industry has seen a surge in popularity of unprecedented levels. National Bank of Georgia would like to warn citizens on this matter.
Cryptocurrencies do not represent means of legal payment in Georgia. Any sort of activity conducted within this sector is not regulated by legislature and therefore is not a sphere of influence of NBG.
Several externalities need to be taken into consideration with the cryptocurrency market:
Today’s cryptocurrencies are characterized by massive fluctuations in value, which are caused by speculative behavior. Therefore, due to their lack of stability, they present high financial risks for their customers.
Virtual currencies do not have centralized managing bodies, which means that any disputes between parties will be difficult to resolve.
Large portion of cryptocurrency trade is conducted through exchange platforms and digital wallets, which are based in many different countries. Legal status of such entities is, most of the time, ambiguous. Therefore, customers who use such entities for financial transactions risk both legal and financial complications. At the same time, such platforms are potential targets for cyber-attacks.
Anonymity of cryptocurrencies attracts illegal entities and activities like money laundering.
National Bank of Georgia calls for citizens to be cautious when dealing with cryptocurrencies and take the aforementioned points into consideration.”
Georgia is home to BitFury, one of the largest producers of Bitcoin mining hardware and chips. BitFury currently mines about 15% of all bitcoins. It’s third in the list of biggest mining pools after China and U.S.
Last week hhe head of the Danish central bank has warned investors to “stay away” from bitcoin. As reported by state broadcaster DR, Danmarks Nationalbank director Lars Rohde argued that bitcoin is “dangerous” and, likening bitcoin investment to gambling , he said: “If you do not like casinos, you’ve got a good alternative.”