The incoming governor of the Philippine Central Bank, Felipe Medalla, has suggested that people investing in cryptocurrencies like Bitcoin are adherents of the Greater Fool Theory. He also argued that people who invest in cryptocurrencies do so because they want to “hide their money from the government.”
A “very scary” investment strategy
The new Governor of Bangko Sentral ng Pilipinas (BSP), Felipe Medalla, has claimed that Bitcoin investors are only buying the cryptocurrency because they are convinced that someone else will buy the same digital asset at a higher price. Such an investment strategy is “very scary,” according to Medalla, speaking at a virtual roundtable hosted by a local media outlet.
As well as reported in business, Medalla believes that the value proposition of cryptocurrencies is based on the so-called Greater Fool Theory. Corresponding Investopedia, the theory states that prices rise because investors can sell overpriced securities to other investors or the “bigger fools”. Investors who subscribe to this theory have been known to ignore valuations, earnings reports, and all other data.
Using crypto to hide funds
Adding to the Greater Fool Theory claims also recently made by Bill Gates, the new BSP governor said that people who choose to invest in cryptocurrency do so because the digital currency gives them the opportunity to to hide their holdings. He explained:
This is a new tool that extends this possibility. There are many people who want to hide their money from the government.
Although the BSP does not directly regulate cryptocurrencies, it has issued guidelines requiring Virtual Asset Service Providers (VASPs) to secure a license from it. Medalla, meanwhile, is quoted in the same report expressing his support for the application of know-your-customer (KYC) and anti-money laundering policies to VASPs.
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