Goldman Sachs CEO: Regulators should be ‘extremely wary’ of Bitcoin’s success

Goldman Sachs CEO and Chairman Lloyd Blankfein said regulators should be "extremely nervous" about bitcoin's recent success, saying the crypto asset undermines lawmakers' ability to oversee the financial system.

On Jan. 25, Blankfein claimed on CNBC’s “Squawk Box” that Bitcoin’s anonymous nature makes it perfect for illicit financing, saying: “You don’t know if you’re paying North Korea, or al-Qaeda, or the Revolutionary Guard.”

While authorities often use blockchain’s transparency to track the use of cryptocurrencies by terrorist groups, Blankfein questioned how regulators can allow crypto assets to flourish in their current form.

“If I were a regulator, I would be extremely nervous about the current success of Bitcoin and I would be fighting it with all my arms,” he said.

In order for Bitcoin to fit in with the existing financial system and regulators, Blankfein believes that many of the fundamental freedoms that Bitcoin brings must be restricted. However, he questioned whether the strong demand for Bitcoin would continue to exist without anonymity and privacy:

“It’s possible, but it would undermine the freedom and lack of transparency that people liked in the first place. So that’s the conundrum that Bitcoin has to get out of.”

Blankfein also criticized Bitcoin’s function as a store of value, and highlighted its price volatility and the technical knowledge required to self-custody BTC.

“Bitcoin is a store of value that can move 10% in a day,” he said. “If you lose your key, or you lose the piece of paper that has your key on it, it’s lost forever, or someone takes it from you, how do you know?”

Last August, the U.S. Department of Justice announced it had seized millions of dollars worth of cryptocurrency from more than 300 wallets linked to al-Qaeda and ISIS, religious extremist groups.

In a statement, Don Fort, director of the IRS-Criminal Investigation (IRS-CI), stressed that the agency tracked down the source of these cryptocurrencies and thus destroyed the financial networks of these organizations. (Cointelegraph)