N.Bayartsaikhan, president of the Central Bank of Mongolia, has issued a warning against the risks of cryptocurrencies.

The central bank president said he recently designated a working group to assess the risks posed by cryptocurrencies. After a careful evaluation of recent information, he decided to release the warning. The alert, published on the central bank’s website, highlighted the potential use of cryptocurrencies for illicit activities such as tax evasion, money laundering and financing terrorism.

“The fact that many people are purchasing cryptocurrencies using their salaries, pensions, and collateral-based loans is honestly worrying,” said Bayartsaikhan. “First and foremost, Mongolbank does not recognize any kind of cryptocurrency as a currency. Furthermore, cryptocurrency cannot be considered a legal means of payment. Only central banks hold the right to print national banknotes. The national currency which is legally recognized as a payment tool by the Central Bank of Mongolia is the  tugrik.”

Bayartsaikhan advised that investors should exercise extreme caution and carefully consider the risks related to purchasing unregulated products such as cryptocurrencies. “As the saying goes, ‘measure seven times, cut off once’ (the English equivalent being: ‘look before you leap’). I advise you to invest in low-risk ventures that you know well,” he said.

The central bank president concluded that if governments of other countries begin to tighten their regulations on usage of cryptocurrencies, there is a risk that its prices will plummet.

“The reason is if it is proven that transactions related to tax evasion, money laundering, and terrorism financing are taking place using cryptocurrencies, there is a high chance that they would be banned,” said Bayartsaikhan. “Mongolbank has previously expressed its stance on such matters.”