One of Europe's leading financial service sector chiefs has publicly blasted cryptocurrencies and predicted that greater regulatory scrutiny is all but inevitable.
Andreas Utermann, Chief Executive Officer of Allianz Global Investors, opined in a scathing post published Wednesday (30 January) on the networking site LinkedIn, that cryptocurrencies are "entirely unsuitable for investing" and more for use by the "criminal underworld".
They can “neither be considered a proper asset class, nor can they be considered as a currency", he continued, adding that cryptocurrencies lack some of the key features underpinning the sustainability of traditional fiat money such as government/treasury backing, tax raising powers and trade-linked productivity.
While Utermann lauded “intentions of some working on blockchain technology" that underpins cryptocurrencies like Bitcoin, the Allianz Global Investors’ boss added that a cryptocurrency looks like something “dreamt up by and most useful” for criminals.
"Just as criminals were adjusting to the clampdown on the €500 note, along comes the cryptocurrency."
UItermann also blasted the environmental costs of mining cryptocurrencies, the one-year energy consumption of which he wrote is “equivalent to the annual energy consumption of Ireland. We cannot afford for them to increase in popularity."
He also said policymakers’ scrutiny was all but inevitable with the "emergence of initial coin offerings being marketed as investments and a home for individuals' savings".
"Even if policymakers are slow to act, it seems unlikely that they will acquiesce in the growth of independent cryptocurrencies over the longer run."
Over the last two years, cryptocurrencies, have regularly been in the spotlight. The poster crytocurrency Bitcoin jumped 1,500% in 2017 to $14,156 only to slump to its current level of around $3,400, on regulatory and security concerns.The UK Financial Conduct Authority and European Commission are in the process of exploring regulatory options to cover cryptocurrencies.
Utermann added that the creation of blockchain and the cryptocurrencies has captured “the zeitgeist” by responding to the trust deficit in society. "However, by attempting to create an environment that does not depend on trust - if such an ambition is achievable - it is in conflict with other spirits of the age: greater transparency, more people and corporations paying their fair share, and environmental protection.
"It would be a better use of our energies to address the sources of mistrust in our institutions than attempt to escape into an alternative reality with a number of evident downside risks."
