Brazil Central Bank Chief Compares Bitcoin to Pyramid Scheme

The president of Brazil's central bank compared bitcoin to a financial scam, according to newly published statements.

AccessTimeIconOct 17, 2017 at 5:45 p.m. UTC
Updated Sep 13, 2021 at 7:03 a.m. UTC
Consensus 2023 Logo
Join the most important conversation in crypto and Web3 taking place in Austin, Texas, April 26-28.
Consensus 2023 Logo
Join the most important conversation in crypto and Web3 taking place in Austin, Texas, April 26-28.

The head of Brazil's central bank took a harsh position toward bitcoin earlier this week, comparing the cryptocurrency to a pyramid scheme.

According to RttNews, central bank president Ilan Goldfajn was dismissive of recent price appreciation in the bitcoin market. And while he said it was key to "separate" bitcoin from other applications of its underlying technology, Goldfajn said that those buying cryptocurrencies are chasing the same kind of returns as those who invest in pyramid scams.

He was quoted as saying:

"The bitcoin is a financial asset with no ballast that people buy because they believe it will appreciate. That is a typical bubble or pyramid [scheme]."

In a pyramid scheme, organizers solicit investors who are then encouraged to find new buyers themselves, thereby creating a revenue stream based on new investments rather than the underlying product itself.

The president continued by confirming that the Banco Central do Brazil "is not interested in bubbles or illicit payments" and that such activities are "not something the central bank would like to encourage." The stance is notable given that legislators in Brazil are currently working on rules for cryptocurrency activity in the country. Whether Goldfajn's comments have an impact on that process remains to be seen.

The Banco Central do Brazil issued a notice in 2014 about the risks of investing in cryptocurrencies, later publishing a research note on blockchain use cases in September.

Ilan Goldfajn image via Flickr

DISCLOSURE

Please note that our privacy policy, terms of use, cookies, and do not sell my personal information has been updated.

The leader in news and information on cryptocurrency, digital assets and the future of money, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups. As part of their compensation, certain CoinDesk employees, including editorial employees, may receive exposure to DCG equity in the form of stock appreciation rights, which vest over a multi-year period. CoinDesk journalists are not allowed to purchase stock outright in DCG.


Learn more about Consensus 2023, CoinDesk’s longest-running and most influential event that brings together all sides of crypto, blockchain and Web3. Head to consensus.coindesk.com to register and buy your pass now.