Brazil Central Bank Chief says Bitcoin is Pyramid Scheme

Will Brazil regulate Bitcoin? What is the future of cryptocurrency in this country? While Brazil Central Bank Chief says Bitcoin is Pyramid Scheme, many Brazilian investors appear cautious in regards to the digital currency market.

18 October, AtoZForex The Chief of the Central Bank of Brazil has expressed a strict stance in regards to the king of the top cryptocurrencies, Bitcoin. The central bank official, namely Ilan Goldfajn, has compared the cryptocurrency to a pyramid scheme.

Brazil Central Bank Chief says Bitcoin is Pyramid Scheme

While some of the biggest world economies, like Russia, are sending mixed signals in relation to the cryptocurrency, the Head of the Banco Central do Brazil has left no doubt about his position. He has stated:

"The bitcoin is a financial asset with no ballast that people buy because they believe it will appreciate. That is a typical bubble or pyramid ."

As a matter of fact, a pyramid scheme is a scheme where organizers solicit investors to then encourage newer and newer buyers. Just like that, the organizers create a revenue flow on the new investments instead of getting profits from the underlying product itself.

Will Brazil regulate Bitcoin soon?

Ilan Goldfajn has appeared dismissive in relation to the recent price hike of Bitcoin. He has stated that the other altcoins are following the same scheme and operate to target those who invest in cryptocurrencies.

In addition, the Chief of the Brazilian Central Bank has stated that the bank "is not interested in bubbles or illicit payments.” He further added that such activities are "not something the central bank would like to encourage."

As of now, Brazilian financial regulators are working on a set of rules for the cryptocurrency activity in the country. However, it is still not clear whether Mr. Golfajn’s remarks will affect the process.

Back in 2014, the Central Bank of Brazil has issued a warning notice in relation to the risk of investing in cryptocurrencies. Moreover, it has later issued a research note on the cases using Blockchain technology.

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