Crypto assets are of concern, says the Central Bank's Rowland

Crypto assets worry, Central Bank's Rowland says - 2018 07 14 bus 42481589 I1The growing popularity of cryptocurrencies such as bitcoin is "of great concern" according to the Central Bank's Derville Rowland.

"Cryptocurrencies are a rather speculative and unregulated investment," and people should be "really aware that they could lose their entire investment," the central bank's chief financial officer said in an interview with Bloomberg.

Other authoritative voices also join the choir

Bank of England Governor Andrew Bailey warned that cryptocurrencies have no intrinsic value and that people should only buy them if they are ready to lose their money.

Bank of Japan Governor Haruhiko Kuroda added that volatility is “extraordinarily high. Bitcoin has risen by around 30% since the beginning of the year.

In July, Rowland will take over as chair of the Standing Committee on Investment Management of the European Securities and Markets Authority (ESMA), the group that helps prepare regulations for the funds industry.

Its rise to prominence has been the face of the Central Bank's executive investigations. The regulator recently fined or is investigating most Irish retail banks for mortgage overload.

In March, he fined Davy Stockbrokers for violations that ultimately led to the resignation of the chief executive and other executives. That company is now for sale due to the collapse.

Derville Rowland said Davy at the time "just needs to look in the mirror" when "wondering how things got so catastrophically wrong."

Cryptocurrencies aren't the only digital investments that cause regulators to worry

Attention is also focused on the so-called “gamification” of equity investing, which Rowland expects will soon become a problem for Europe.

Online brokers like Robinhood Markets have brought a slew of Investors mom and pop in the US market and critics accuse them of turning trading into a social activity.

Readers of online platforms like Reddit have wreaked havoc with stocks in companies like GameStop and AMC Entertainment Holdings, and people could be exposed if they effectively used message boards as a substitute for investment advice.

The European Securities and Markets Authority held discussions on the issue, as did the Central Bank, Rowland said.

While there is no deadline yet for new rules, regulations need to be "technologically neutral," he said, "so you don't get better protections in old paper-based processes than those in multiple online processes."

Derville Rowland has long been a proponent of greater diversity in financial services, which she believes could help improve industry regulation.

Decision making, risk control and performance have all improved with diversity, he told Bloomberg, adding that the industry has "a very long way to go."

“The investment management industry is not diversified and has to work a lot more on this topic. It's something we've brought to the attention of the boards and it's something that is close to my heart, ”he added.