Bitcoin rallies $1,000 after FSB letter to G-20 officials

After a week of misery, the No. 1 digital currency has something to smile about.

On the eve of a meeting of Group of 20 finance ministers and central bankers in Buenos Aires, the Financial Stability Board, or FSB, issued a letter to the international finance ministers saying that cryptocurrencies do not pose any near-term systemic risk to the global financial system.

“The FSB’s initial assessment is that crypto-assets do not pose risks to global financial stability at this time,” wrote Mark Carney, chairman of the FSB. The FSB is an international watchdog that makes recommendations about the global financial system.

“This is in part because they are small relative to the financial system. Even at their recent peak, their combined global market value was less than 1% of global GDP,” wrote Carney, who is also governor of the Bank of England.

After the release, the price bitcoin BTCUSD, +1.93% rose by as much as $1,000 to an intraday high of $8,434.93 after spending a good part of the weekend under $7,500. Bitcoin was last traded at $8,326.16, up 1.6% on the day.
The G-20 could be a turning point for the cryptocurrency market as investors call for a global coordinated approach to govern the digital asset market.

“G-20 representatives must use this summit to work toward an agreement to adopt common regulations for cryptocurrencies. By doing so, they will position their respective countries on the right side of history,” said Nigel Green, chief executive of deVere Group.

It has been a tumultuous last two weeks for digital assets that have shed a combined $140 billion since the beginning of March. A raft of regulatory and advertising crackdowns pushed most digital assets to 2018 lows, and this trend looked to continue over the weekend when Sky News reported that Twitter would ban cryptocurrency ads, following similar actions from Facebook Inc. FB, +0.31% and Alphabet Inc.’s Google GOOG, -3.16%

However, the FSB news halted the skid, and major digital currencies followed bitcoin in recovering weekend losses.

Ether rose back above $500 over the weekend and is slightly lower this morning, trading down 0.4% at $534.79, bitcoin cash is up 3.1% at $962.81, Litecoin is higher by 1.3% at $155.88, and Ripple is up 3.3% at $0.68.

While the report was greeted with optimism, Carney did warn that there could be concerns down the road.

“Wider use and greater interconnectedness could, if it occurred without material improvements in conduct, market integrity and cyber resilience, pose financial stability risks through confidence effects,” wrote Carney.

Carney added that the use of crypto-assets for illegal activity and laundering remains a hurdle for the integrity of the industry.

Bitcoin futures have opened the week in the red. The Cboe Global Markets April contract XBTJ8, -1.46% is down 2.5% at $8,370 and the CME Inc. April contract is off 2.6% at $8,340.