After diving into $7,000 territory over the weekend following days of bad news, Bitcoin is back up around $8,500 thanks to an international watchdog statement saying the currency doesn’t pose any threat to the global financial system.
The crypto world has been jittery lately, and a G20 meeting of the world’s finance ministers and central bankers this week, was adding to the mounting uncertainty until a Monday statement gave Bitcoin a new lease on life and halted its drop.
“The FSB’s initial assessment is that crypto assets do not pose risks to global financial stability at this time,” read a Monday statement by Mark Carney, Bank of England governor and chairman of the Financial Stability Board, an international watchdog that makes recommendations for the global financial system.
The FSB isn’t afraid of cryptocurrencies because—for now—they’re still “small relative to the financial system”.
“Even at their peak, their combined global market value was less than 1% of global GDP,” wrote Carney.
It’s by no means a final sentiment, though. The FSB sees the crypto market rapidly evolving and eventually reaching a point at which it could disrupt the global financial system.
What will the FSB be looking for the next time it assesses the situation?
Wider use of cryptos “without material improvements in conduct, market integrity and cyber resilience”, which would pose risk to financial stability.
The FSB also noted a list of pros and cons, heralding the underlying technology—blockchain—for “having the potential to improve the efficiency and inclusiveness of both the financial system and the economy”, but raising warning bells surrounding consumer and investor protection and illicit activity such as money laundering and terrorist financing.
It was enough, though, to breath a bit of life back into embattled Bitcoin and other cryptocurrencies, which number over 1,500 at this point. Related: U.S. Political Uncertainty Keeps Stock Markets On Edge
Bitcoin Cash (BCH) has gained 13 percent in 24 hours. Ripple (XRP), which had lost 15 percent on Sunday, recovered on Monday as well, up over 22 percent in the past 24 hours. Stellar (XLM) also gained over 30 percent in 24 hours, while Ethereum was also slightly recovering.
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Last week, the International Monetary Fund (IMF) called on the G20 to make a push to police the “dark side” of cryptos, hoping the group would discuss regulation this week in Buenos Aires.
But for this week meetings, on Monday and Tuesday, radical action is clearly not on the table—yet.
The IMF’s managing director, Christine Lagarde, gave her own thumbs up of sorts to cryptos with this lifeline:
“It would not be wise to dismiss crypto-assets,” she wrote in a blog post. “We must welcome their potential but also recognize their risks.”
Speaking to Bloomberg, Stephen Innes, head of Asia Pacific trading for Oanda Corp., said “right now the guideposts markets are using for support is around $7,500 and $11,000 on the top side.
By Fred Dunkley for Safehaven.com
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