Joseph Borg, president of the North American Securities Administrators Association warned on Tuesday (Dec. 12) that bitcoin has entered the “mania” phase, with some people taking out mortgages just to purchase the cryptocurrency.
In an interview with CNBC, Borg said that bitcoin shares are on the “mania curve” and that there has to be a leveling off at some point.
“We’ve seen mortgages being taken out to buy bitcoin … People do credit cards, equity lines,” Borg told the newswire. “This is not something a guy who’s making $100,000 a year, who’s got a mortgage and two kids in college ought to be invested in.”
The comments from Borg come as bitcoin is exploding in value, and regular investors are clamoring to get in on the action. Bitcoin started the year trading around $1,000 and was higher than $19,000 last week. As perhaps a further boost to bitcoin’s price, CME and Cboe World Markets have recently brought more legitimacy to the market by gearing up to launch bitcoin futures.
Borg acknowledged that cryptocurrency is here to stay, as is blockchain — the technology that underpins it. But he doesn’t think the moves by CME and Cboe will actually validate the digital currency market: “As [technology] continues to accelerate and continues to increase, regulators have got to understand what it is that the innovation’s coming up with, and we’re still trying to get educated,” he said. “We’re looking at it from a money transmission point of view, but that doesn’t cover the entire bitcoin space.”
While Borg thinks there will be some leveling out of bitcoin, not everyone shares that view. Cameron Winklevoss, who reportedly became one of the first billionaire bitcoin investors, is predicting that the widely popular and ever-volatile cryptocurrency will move even higher.
In an interview with CNBC late last week, Winklevoss said that bitcoin disrupts gold. “Gold is scarce; bitcoin is actually fixed,” he said. “Bitcoin is way more portable and way more divisible. At a $300 billion market cap, it’s certainly seen a lot of price appreciation; but gold is at $6 trillion, and if bitcoin disrupting gold is true and it plays out … then you can see 10 to 20 times appreciation, because there is a significant delta still,” Winklevoss said. “Long-term, directionally, it is a multi-trillion-dollar asset — I don’t know how long it takes to get there.”