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The Labour Party would try to regulate cryptocurrencies if it was in power, shadow home secretary Diane Abbott has said.The senior Labour MP said she believes Bitcoin is a “Ponzi scheme.”The governor of the Bank of England has also called for a greater regulation of digital currencies.
Jeremy Corbyn’s Labour Party is a strong proponent of regulation and government oversight — and cryptocurrencies are no exception to that.
Speaking to Politics Home, Labour’s shadow home secretary said she believes Bitcoin is a “Ponzi scheme,” and that a Labour government would crack down on digital currencies.
“Labour overall thinks it’s important to have proper regulation of financial services,” the MP for Hackney North and Stoke Newington said. “It was poor regulation of financial services which led to the 2008 crash and obviously regulating Bitcoin would be part of that.”
It’s not clear exactly what form this regulation would take — but her remarks are still likely to be an anathema to cryptocurrency enthusiasts. After all, the fundamental principle of Bitcoin is that it operates totally independently of governments and regulators. By design, there’s no central authority that can interfere with the market, or prevent certain activities, or print more Bitcoin.
Abbott was also critical of Bitcoin on a more fundamental level, arguing that the price is artificial and it would collapse if Bitcoin investors tried to cash in on their supposed riches. Bitcoin’s use by terrorist organisations is another concern for Labour, she said.
“One of the problems with Bitcoin is the extent to which it is just a gigantic Ponzi scheme,” she said. (A Ponzi scheme is a type of scam where early investors make money by convincing more people to sign up before the whole thing eventually collapses.)
“If everyone took their Bitcoin money and tried to buy a new car all at once the whole thing would collapse. So, we are worried about the extent to which Bitcoin is a Ponzi scheme but we are certainly worried about how in the here and now it is being used to fund terrorist activity and that is something we are looking at.”
Abbott isn’t the only high-profile British political figure calling for a cryptocurrency crackdown right now. Bank of England governor Mark Carney also attacked Bitcoin in a stinging speech and interview on Friday, saying it looked like it was heading for a “pretty brutal reckoning.”
“There are issues for authorities who deal with money laundering, terrorist financing, and price fixing. There have been a number of incidents of theft — not just big crimes but also steady thefts from people’s wallets,” he said.
“The operational standards of these currencies are nowhere near where they need to be … They will be regulated in my view.”