Cryptocurrencies are risky for consumers, says BoE's Haldane

LONDON (Reuters) – Cryptocurrencies pose a risk to British consumers, though not to the financial system as a whole, the Bank of England’s chief economist, Andy Haldane, said on Tuesday.

FILE PHOTO: A collection of Bitcoin (virtual currency) tokens are displayed in this picture illustration taken December 8, 2017. REUTERS/Benoit Tessier/Illustration/File Photo

“There’s lots of potential risks there, one of which is the danger to the consumer from buying into this stuff,” Haldane said in a BBC television interview.

Bitcoin BTC=, the best known cryptocurrency, soared in value from around $1,000 at the start of 2017 to almost $20,000 in mid-December, before tumbling below $6,000 last month and then staging a partial recovery.

Haldane’s concerns are similar to those expressed by BoE Governor Mark Carney in a speech on Friday, and previously by Britain’s Financial Conduct Authority.

Many global regulators have warned about cryptocurrencies this year and China has banned financial institutions from processing them. Carney said this would be a step too far, given the potential of the underlying technology to improve payments and asset clearing and settlement.

Haldane said the BoE continued to monitor cryptocurrencies, and that at less than 1 percent of total global wealth, they did not pose a big danger to the world’s financial system.

But asked if he would invest in cryptocurrencies himself, Haldane said he was very risk averse, and would not.

Reporting by David Milliken; Editing by James Dalgleish

Venezuela to sell petro cryptocurrency via Dicom forex system

CARACAS (Reuters) – The Venezuela government will start auctioning its new petro cryptocurrency to private companies via its Dicom foreign exchange platform in a few weeks, Vice President Tareck El Aissami said on Tuesday.

The OPEC country last month began selling the new digital token, which President Nicolas Maduro has said will be backed by oil reserves, in a private sale to investors. Maduro says the petro will help skirt U.S. financial sanctions.

Opposition critics call the petro an illegal debt issue, and the U.S. Treasury Department has warned that it may violate sanctions and thus constitutes a legal risk for investors.

“The petro is going to be auctioned on Dicom,” El Aissami said in a meeting with businessmen broadcast on state television, adding that companies will be able to use petros to pay for imports of raw materials.

“The petro is going to be our powerful international currency, above the dollar.”

It is not immediately evident if and how the petro can function as foreign currency or how it would help Venezuelan businesses with international commerce transactions.

Foreign companies are unlikely to accept it as payment given the legal doubts surrounding it, and few investors have publicly announced having purchased it.

El Aissami also called on local banks to buy the petro at a discount during the preliminary phase, which ends on March 20.

During this phase, petros can be acquired with “dollars, euros or any other currency,” he said, and may be held by banks as assets on their balance sheets.

Reporting by Corina Pons, writing by Brian Ellsworth; Editing by Susan Thomas