Peru’s Central Bank Says Cryptocurrencies Are Risky Due to High Volatility

Peru’s central bank has reacted to the recent crypto markets collapse by warning about the high volatility of digital currencies on its Twitter Friday, Nov. 16.

In its recent post, the Peruvian central bank included Bloomberg graphics on Bitcoin’s (BTC) price from December 2017 to mid-November 2018. The picture is followed by a statement:

“Cryptocurrencies are not supported by central banks and pose risks due to the high volatility in their price, fraud cases and their possible use in illicit activities. Bitcoin’s price fell 56% as of October 2018, and has lost an additional 13% percent in November.”

According to Spanish language crypto outlet Criptonoticias, Peru is not currently developing any type of crypto regulation. However, in September 2017, the country’s Superintendency of Banking and Insurance (SBS) joined the blockchain-related R3 consortium to conduct research on the technology and study its possible implementation in Peru.

Moreover, the number of crypto traders in Peru has been steadily growing throughout 2018. According to data provided by crypto statistics website Coin Dance from LocalBitcoins, the year started with roughly 17 BTC being traded weekly in Peru, but by late September the amount has reached almost 150 BTC per week.

The amount of BTC traded weekly in exchange to the national fiat, Peruvian sol. Source: Coin Dance

The crypto markets have recently seen a drastic drop off since Wednesday, Nov. 14, with BTC dipping below $5,000 for the first time in 2018 and other major cryptocurrencies, such as Bitcoin Cash (BCH), losing up to half of the price. Today, Nov. 20, BTC has hit its lowest mark since October 2017, falling to $4,237 at one point in the past 24 hour period.