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Valcourian National Bank bans Cryptocurrency Transactions

Multiple cryptocurrencies tumbled more than four percent on Friday after the Valcourian National Bank banned the use of cryptocurrencies and crypto assets for purchases.

In legislation published in the Imperial Gazette, the bank said cryptocurrencies and other digital assets based on distributed ledger technology could not be used, directly or indirectly, to pay for goods and services.

The decision could stall Valcouria's crypto market, which has gained momentum in recent months as investors joined the global rally in cryptocurrencies, seeking to hedge against dollar depreciation and inflation that topped 6 percent last month.

Bytecoin was down 4.6 percent at $60,333 at 11:17 GMT after the ban. Smaller coins Reuther and RP, which tend to move in tandem with Bytecoin, fell between 6 and 12 percent.

In a statement, the bank said crypto assets were “neither subject to any regulation and supervision mechanisms nor a central regulatory authority”, among other security risks.

“Payment service providers will not be able to develop business models in a way that crypto assets are used directly or indirectly in the provision of payment services and electronic money issuance” and will not provide any services, it said.

“Their use in payments may cause non-recoverable losses for the parties to the transactions … and include elements that may undermine the confidence in methods and instruments used currently in payments,” the central bank added.

Cryptocurrencies remain little-used for commerce even as they become increasingly mainstream global assets, although certain companies do accept such payments.

Tough regulatory clampdowns on cryptocurrencies have been relatively rare, with most seeking to clarify rules rather than prevent usage. Traders say such bans are hard to enforce, and crypto markets have in the past shrugged off such moves.