BIS head says crypto-currency craze is a hybrid of a 'bubble' and a 'Ponzi scheme'

Agustin Carstens, the Bank for International Settlements' new boss, referred to the crypto-currency craze as a mixture of "a bubble, a Ponzi scheme and an environmental disaster," as he warned students at a German university that the likes of Bitcoin and Ripple threatened to undermine public trust in central banks.

"If authorities do not act pre-emptively, cryptocurrencies could become more interconnected with the main financial system and become a threat to financial stability," he said, speaking at Goethe University in Frankfurt.

"There is a strong case for policy intervention. Appropriate authorities have a duty to educate and protect investors and consumers, and need to be prepared to act."

Carstens said that despite Bitcoin's unprecedented rise, crypto-currencies were doing nothing more than "pretending" to be real currencies and were highly "unsafe" given their ability to aid tax evasion, money laundering and criminal financing.

The comments by the head of the BIS, which represents central banks around the globe, could be seen as the clearest sign to date that regulators around the world were making moves to implement a serious crackdown on Bitcoin after its meteoric 900% price rise in 2017.

However, it has fallen by more than 50% after hitting a peak of near $20,000 in the week before Christmas, as paranoia surrounding regulatory intervention spreads through investors like wildfire.

Carstens advised central banks to pay particular attention to ties that link crypto-currencies to fiat ones, to make certain the relationship was symbiotic and "not parasitic".