Cryptocurrencies need ‘serious supervision’ - May

IMF chief Lagarde says use of cryptocurrency to conceal illicit trades is unacceptable

British prime minister Theresa May made her keynote address at the World Economic Forum in Davos where she called on governments not to 'pull in different directions.'


The risk that cryptocurrencies can be used by criminals means Britain and other governments should be looking at them “very seriously”, British prime minister Theresa May said.

Speaking at an interview on the sidelines of the World Economic Forum’s annual meeting in Davos, Switzerland, Mrs May urged supervision of cryptocurrencies such as bitcoin, which have grown in popularity in recent years.

“I think we should be looking at these very seriously, precisely because of the way they can be used, particularly by criminals. It’s something that has been developing,” she said. “I think it’s something we need to look at.”

She said tech companies could change people’s lives but companies must focus on the issue of social responsibility, especially in the areas of terrorism and child pornography, Mrs May said.

“We’re making progress, but I want to see us make even more progress to ensure that people can look at the internet and know it is a force for good,” she said.

Meanwhile, International Monetary Fund managing director Christine Lagarde said the institution was aware there will be innovations but says crypto-anonimity and its use to conceal illicit, “dark trades” such as terror financing and money laundering is “unacceptable”.

Ms Lagarde also raised concerns about the resources devoted to cryptocurrencies. She said mining cryptocurrencies is far too energy intensive and is consuming as much electricity as a G-20 economy.

“The bitcoins mining, which is this accelerated and augmented use of computers to actually determine the value and incentive the functioning of the mechanism, is energy angry,” Ms Lagarde said. “And we figure that, in 2018, if it continues, that system will actually consume as much electricity as Argentina. ”

The electricity needed by the global network of computers running the blockchain technology behind bitcoin has more than tripled in the last year to more than 37 gigawatt-hours a day, according to Bloomberg New Energy Finance. That’s equivalent to about 30 1.2-gigawatt nuclear reactors running at full capacity.

While higher prices have spurred more mining, it’s impossible to know where the market is headed, according to Bloomberg analyst Isabelle Edwards. If prices remain high, energy consumption will do the same. But the amount of electricity needed to mine bitcoins could fall if there are improvements in computing technology.

“In times of climate change and when we look at how much coal is being used in some Chinese provinces to actually mine bitcoin, it’s a big concern,” Ms Lagarde said. – Bloomberg