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Russia's Central Bank feels worries cryptocurrencies may have 'Viagra effect'

January 17, 18:46 UTC+3 MOSCOW

A solution that was being developed for the global market as a means of payment in reality constitutes an excellent platform for a financial pyramid, the bank’s first deputy governor said

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© AP Photo/Kin Cheung

MOSCOW, January 17. /TASS/. The Bank of Russia feels certain worries about the risk what it describes as "Viagra effect" of cryptocurrencies may furnish a convenient basis for financial pyramids, though they were created for very different purposes, the bank’s first deputy governor, Sergey Shvetsov, told the Gaidar Forum in Moscow on Wednesday.

"We find the Viagra effect worrisome. Viagra’s invention was casual. It was a byproduct of the work on a heart muscle drug. The end effect turned out to be something very different. As for the cryptocurrencies are concerned, we suspect that a solution that was being developed for the global market as a means of payment in reality constitutes an excellent platform for a financial pyramid. The net effect proved totally different from the expected," Shvetsov said.

Those who buy them regard cryptocurrencies rather as an investment, and not as a means of payment, he remarked.

"What we can see today is an investment rush, and not acquisition of a means of payment. People are investing into something they have very little knowledge about, hoping to resell it at a higher price someday. It’s a purely investment affair. It is very good we care to give thought to it, but it is absolutely clear that regulators will not do anything that might encourage the growth of such pyramids," Shvetsov said.

The consumer properties of cryptocurrencies may be lost if they fall under the operation of tax or money laundering laws, he said. In that case cryptocurrencies will leave the market, because their investment value will be of no interest to potential buyers anymore," he said.

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