Cryptocurrencies suffered yet another jolt after Brazil banned funds from investing in them. The decision that comes due to concerns about the legality of cryptocurrency based transactions puts a question mark over their future.
As per a report by Reuters, Comissão de Valores Mobiliários (CVM), the South American nation’s market regulator stated that the cryptocurrencies cannot be considered as financial assets and hence placed legal restrictions against the use of funds.
“The interpretation of this technical division is that cryptocurrencies cannot be qualified financial assets … and for this reason this their direct acquisition by investment funds … is not permitted,” stated a CVM circular that was quoted in the report.
While the initial ruling may not directly affect those who want to invest in cryptocurrencies using foreign funds, it nonetheless highlights the global trend that is seeing rising skepticism and opposition towards cryptocurrency trading. Regulators across the globe are taking steps to bring a check on cryptocurrencies with South Korea on the verge of banning cryptocurrencies as a whole.
While the unregulated and uncontrolled characteristics of the cryptocurrencies are a cause of concern, the unpredicted fluctuation of the value of Bitcoin has also raised concerns.
The value of Bitcoin, that rose up to 1500 percent by the end of last year, has fallen drastically since then. Concerns of virtual currencies like Bitcoin being nothing but a bubble were further aggravated when popular investor Warren Buffet opined that cryptocurrencies are heading towards a disaster as they will come to a bad ending. "I can say with almost certainty that they will come to a bad ending," he was quoted as saying.
It will be crucial for the future of cryptocurrencies how other countries react to these developments. If regulatory authorities across the globe follow suit it may well be disastrous for the future of virtual currencies.