THE value of leading cryptocurrencies soared on Wednesday after plans to regulate them were scrapped by Europe’s central bank in a move that stunned traders.
Mario Draghi, president of the European Central Bank (ECB) rubbished claims that the organisation should curb online currencies like Bitcoin.
Prices rocketed on the announcement following an intense January for Bitcoin which saw its value tank after reaching an all time high of £14,837.
The month was equally rocky for other top currencies Ethereum and Ripple, with analysts referring to the sinking markets as a “horror show” and a “cryptopocalypse”.
Bitcoin rose to £6,678.1 ($9,293.4) on Wednesday, up 5.97% on the previous day, and was continuing to rise steadily tonight.
Ethereum also rose to £599.98 ($838.20), while Ripple experienced similar surges.
Wednesday’s rises follow Draghi’s comments to the public on Tuesday, where he made clear that “it’s not the ECB’s responsibility” to step in these markets.
But he offered a word of caution to prospective buyers of Bitcoin, saying: “Frankly, I would think [about] it carefully”.
Draghi noted that unlike Bitcoin, the Euro was far more stable and had the backing of a central bank.
Instead of government or central bank regulation, cryptocurrencies use their own technologies to regulate and authorise transactions.
His comments are a relief for investors, many of them amateurs, with some afraid that interference could lead to markets crashing.
But regulation of cryptocurriences has been hotly contested.
Agustin Carstens, head of the Bank for International Settlement, called for banks to be limited in their trading.
He even condemned cryptocurrencies as a “Ponzi scheme”.
South Korea’s justice minister Park Sang-ki revealed plans to ban anonymous currency trading, while China’s government warned currencies were being used to siphon money away from its borders.
These tough stances will be brought to the table when bank executives meet for Buenos Arias’ G20 meeting in March.
Poorer market conditions for Bitcoin, Ethereum and Ripple are a far cry from 2017, which saw an explosion of new cryptocurrencies being sold, with eager start-ups trying their hand at replicating Bitcoin’s success.
And while today’s comments are positive for cryptocurrencies traders, it remains to be seen whether rises can recover from January’s severe price drops.