Bitcoin bubble won’t have `sharp break’ says George Soros

Cryptocurrencies are a bubble and cannot function as actual currencies because of their volatility, legendary macro trader George Soros said from Davos, Switzerland. But he didn’t quite predict the crash that some naysayers have forecast.

“Normally when you have a parabolic curve, eventually it has a very sharp break,” Soros said Thursday. “But in this case, as long as you have dictatorships on the rise you will have a different ending, because the rulers in those countries will turn to Bitcoin to build a nest egg abroad.”

Soros, who made $1 billion betting against the British pound in 1992, said that rather than suffering an abrupt break cryptocurrencies are more likely to “have a rather flat top.” At the same time, the blockchain technology behind Bitcoin can be put to positive use, he said, adding that his Open Society Foundations are using such technology to help migrants communicate with their families and keep their money safe.

Meanwhile, as Nordea Bank AB’s Bitcoin ban for staff has unions questioning the legality of the move, Sweden’s minister in charge of financial legislation says it’s understandable that the industry is resorting to such measures.

“If banks have rules on what investments they or their employees are trading in, it is up to them,” financial markets minister Per Bolund told Bloomberg. “I am not surprised some banks are setting up rules, considering the volatility in the cryptocurrency market.”

Asked specifically whether the ban was legal, Bolund said he “would leave that for the labor market parties and legal experts to assess.”

Nordea said this week a decision to prohibit its roughly 31,000 employees from trading Bitcoin and other cryptocurrencies was prompted by a lack of regulation in the area. But finance unions in Sweden and Denmark were quick to characterize the move as a potentially unlawful curb on staff freedoms. Regulators have said they won’t intervene, arguing the matter is ultimately a question for politicians to resolve.

Bolund said Sweden’s government is aware of the risks posed by the rise of cryptocurrencies and is monitoring the developments to ensure that consumers aren’t put at risk.

“We need to avoid that the new development can be used by criminals and terrorists to evade existing regulation concerning money-laundering and financing of terrorism,” he said.

Bolund pointed to a political agreement reached in Europe in December, requiring EU members “to subject virtual currency exchanges and wallet providers to anti-money laundering and counter-terrorist financing regimes.” He said that in Sweden, exchanges are already subject to anti-money laundering and counter-terrorist financing legislation “since the FSA treats them like payment service providers.”

“We will continue to follow this issue,” Bolund said. “We are following this issue and the consumer protection aspect of it. This as well as other issues are discussed on the international level.”

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