Mobius: Investors To Flock To Gold As Governments Crackdown On Cryptos
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(Kitco News) - An inevitable global government crackdown on cryptocurrencies will trigger a new rush to gold, said emerging markets guru Mark Mobius.
Digital currencies are bound to catch the eyes of lawmakers, largely due to their popularity among illicit segments of societies, the executive chairman at Templeton Emerging Markets Group, told Bloomberg in an interview on Monday.
“Cryptocurrencies are beginning to get out of control and it’s going to attract the attention of governments around the world,” Mobius said. “You’re going to get a reversion back to gold because people are going to wonder, can I really trust these currencies?”
The famed investor pointed out that digital currencies like bitcoin are often used by terrorist groups and drug dealers, making a crackdown on them unavoidable.
This is already being witnessed in countries like China. On Monday, the People’s Bank of China (PBOC) announced that initial coin offerings (ICOs) are illegal, calling on all such activities to halt immediately. The news shocked bitcoin investors, setting the digital currency back 11.4% that day, down to $4,326.75. On Wednesday, bitcoin was last seen trading at $4,586.50.
The PBOC based its decision on an investigation, stating that ICOs disrupt financial order and need to be banned. As of July 18, China had 43 ICO platforms, according to the National Committee of Experts on the Internet Financial Security Technology.
Mobius added that traders need to trust the platform they choose to invest in, which could be a problematic factor for cryptocurrencies.
“People need a means of exchange and they need to trust that,” he said. “Right now the trust is good -- with bitcoin people are buying and selling it, they think it’s a reasonable market -- but there will come a day when government crackdowns come in and you begin to see the currency come down.”
Mobius is one of the most famous investors in the world, known for his outlooks and sometimes even referred to as “Piped Piper of emerging markets”.
Other big names raising red flags on cryptocurrencies include Bank of America Merrill Lynch, which said in July that bitcoin is unlikely to get the status of “pledgeable collateral” due to high risk of hacking and theft.
“A key step for bitcoin would be for it to become pledgeable collateral,” Francisco Blanch, BofA’s head of Global Commodities and Derivatives Research, said in a note. “However, large inherent risks to digital tokens such as fraud, hacking, theft, new protocol adoption, limited acceptance, and that it is not legal tender many places in the world make it an unlikely development.”