Minister warns Australians that cryptocurrency is ‘high risk’ after Elon Musk and China cause a Bitcoin plunge
- Financial Services Minister Jane Hume issued cryptocurrency investor warning
- Bitcoin has lost a third of its value during the past week because of Elon Musk
- Billionaire will no longer accept Bitcoin as payment to buy Tesla electric cars
- China has also declared it would crack down on cryptocurrency transactions
A federal government minister has warned cryptocurrency investors to beware of the risks after billionaire Elon Musk and China sparked a Bitcoin sell off.
Financial Services Minister Jane Hume sounded a note of caution as the Bitcoin freefall continued on Thursday.
‘They are volatile and high risk assets and investors must be aware of these risks,’ Senator Hume told the Stockbrokers and Financial Advisers Association Conference in Sydney.
Since May 12, Bitcoin has lost a third of its value, plunging from $73,500 to $51,100 as of Thursday.
A federal government minister has warned cryptocurrency investors to be aware of the risks after billionaire Elon Musk and China sparked a Bitcoin sell off. Financial Services Minister Jane Hume (pictured) sounded a note of caution as the Bitcoin freefall continued on Thursday
Musk last week sparked a 16 per cent one-day plummet after he declared he would no longer be accepting Bitcoin as payment for his electric vehicles.
He argued cryptocurrencies were being ‘mined’ using high-powered computers requiring fossil fuel energy to continuously solve computational math puzzles.
Bitcoin plunged by another 19 per cent on Wednesday after China’s Communist Party government announced it would ban cryptocurrency transactions.
Musk in March bought $US1.5billion of the world’s most valuable cryptocurrency, sending its price to a record $US60,000 or $A80,000.
This saw Bitcoin post 500 per cent annual growth.
Despite cryptocurrencies being unregulated, Senator Hume said digital currency transactions were subject to Australian law, hinting the government was alert about tax evasion possibilities.
‘We take no issue with consumers investing in cryptocurrencies,’ she said.
Billionaire Elon Musk last week sparked a 16 per cent one-day plummet after he declared he would no longer be accepting Bitcoin as payment for his Tesla electric vehicles
‘But like investment in any asset class, they are subject to Australian law, including our market conduct, know-your-client and tax laws. It is not a free pass.’
Liberal senator Andrew Bragg, the chairman of a parliamentary inquiry into financial technology, last month admitted lawmakers didn’t know how to regulate cryptocurrencies.
‘A driver of the problem is that blockchain is a new form of property right,’ he said.
‘It is not, of itself, a security, a share, a bond, personal property, or a contract.’
Senator Hume said the government accepted cryptocurrencies were here to stay with 4,000 different ones in existence including Dogecoin, created as a protest, and Ethereum, a unit favoured by business.
‘Cryptocurrency is not a fad. It is an asset class that will grow in importance,’ she said.