Bitcoin back below $30,000; European regulators renew crypto warnings

Representations of cryptocurrencies Bitcoin, Ethereum, DogeCoin, Ripple, Litecoin are positioned on PC motherboard on this illustration taken, June 29, 2021. REUTERS/Dado Ruvic/Illustration/File Picture

HONG KONG, Might 16 (Reuters) – Cryptocurrencies resumed their slide on Monday, giving up the positive aspects that they had eked out over the weekend, as regulators continued to circle.

European officers reiterated warnings of dangers posed by cryptocurrencies.

Bitcoin fell 5% to round $29,700 on Monday in Asian commerce, sliding alongside shares due to worries about excessive inflation and rising rates of interest.

The world’s largest cryptocurrency has misplaced round one fifth of its worth up to now this month, because the spectacular collapse of TerraUSD, a so-called stablecoin, has roiled crypto markets already falling amid broad promoting of dangerous investments.

TerraUSD, which broke its 1:1 peg to the greenback final week and is at present buying and selling close to 14 cents, in accordance with value website coingecko, has drawn explicit consideration to stablecoins and the vital position they play within the crypto system. A few of that spotlight has come from monetary regulators.

Financial institution of France Governor Francois Villeroy de Galhau advised a convention on Monday that crypto property may disrupt the worldwide monetary system in the event that they weren’t regulated and made interoperable in a constant and acceptable method throughout jurisdictions. read more

He pointed to stablecoins, which he mentioned have been considerably misnamed, as among the many sources of danger.

Talking individually, Fabio Panetta, member of the manager board of the European Central Financial institution, additionally mentioned on Monday that stablecoins have been susceptible to runs. read more

Tether, the world’s largest stablecoin, briefly misplaced its 1:1 peg on Might 12, earlier than recovering. In contrast to TerraUSD, Tether is backed by reserves in conventional property, in accordance with its working firm.

On the identical day, bitcoin dropped so far as $25,400, its lowest stage since December 2020, however recovered to as excessive as $31,400 on Sunday.

Ether, the second-largest cryptocurrency, fell 5.6% to round $2,000 on Monday.

Regulators elsewhere are additionally involved. The U.S. Federal Reserve warned final week that stablecoins have been susceptible to investor runs as a result of they have been backed by property that would lose worth or grow to be illiquid in instances of market stress.

Reporting by Alun John; Enhancing by Bradley Perrett

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