German president warns on cryptocurrencies

The President of Germany Frank-Walter Steinmeier arrives at Buckingham Palace, London, Britain November 28, 2017. REUTERS/Victoria Jones/Pool

FRANKFURT (Reuters) - German President Frank-Walter Steinmeier on Thursday warned the financial sector that it had a responsibility to prevent speculation and the formation of trading bubbles in the cryptocurrency market.

Steinmeier told about 1,000 guests at a Deka Bank event in Frankfurt that a new debate was needed about regulating cryptocurrencies, given recent gyrations in their valuations.

“When I look at the market developments of cryptocurrencies, I don’t see currencies. I see betting games,” Steinmeier said. “Preventing new speculation acrobatics and formation of bubbles is primarily the responsibility of the financial sector.”

Steinmeier said it was important for markets to stay grounded in the real economy, underscoring the need to protect small investors. “Where do cryptocurrencies avoid regulation and steering through central banks? Where do they make possible money laundering, tax evasion and illegal businesses?” he added.

Regulators are increasingly looking how to monitor the crytocurrency market, after Bitcoin gained 2,000 percent in 2017, touching a record high of around $20,000 shortly before Christmas.

Reporting by Hans Seidenstuecker; Writing by Andrea Shalal; Editing by Christoph Steitz