Categories: Editorial, OpinionThe following editorial appeared on Bloomberg View:Not a moment too soon, America’s biggest banks have moved to ban their customers from using credit cards to buy bitcoin or other cryptocurrencies.Banks and regulators have been slow to guard against the dangers of the bitcoin phenomenon — and central banks, in particular, need to move more forcefully.The problem, to be clear, is not the ingenious technology of cryptocurrency itself.Correctly applied, that’s a valuable and far-reaching innovation.Nor is there a problem with the vision of dispensing altogether with physical cash. That’s a goal well worth pursuing, so long as its digital successors have the government backing they need to function correctly as money. Without that crucial ingredient, though, risk arises from the misapplication of cryptocurrency technology and the speculative mania surrounding it.The danger is clearly articulated by Agustin Carstens, general manager of the Bank for International Settlements (the central banks’ central bank).Bitcoin, he says, “has become a combination of a bubble, a Ponzi scheme and an environmental disaster.”In principle, the blockchain technology underlying bitcoin allows cheap, fast transactions without a central counterparty.There are countless promising applications of this idea — but serving as a spontaneous private replacement for cash isn’t one of them.If an asset has no intrinsic value, is not recognized as legal tender, and lacks an effective way to regulate its purchasing power, it cannot reliably serve as money. Up to now, in fact, cryptocurrencies have been in demand not because of their utility as money, but because — like tulips in the 17th century or dot-com stocks in the late 20th — they offered naive investors the prospect of amazing returns. For a while, that’s what speculators got.More recently, the bubble has deflated, amid proliferating reports of thefts, fraud and technical breakdowns.As losses mount, thoughts should turn to the implications for the rest of the financial system. Carstens stresses three.First, there’s the need to protect investors — especially amateurs who might know no better — from the consequences of their own recklessness.Second, cryptocurrencies can be used to grease the wheels of tax evasion, money laundering and other crimes. This too requires a regulatory response.Third, and not least, the crypto bubble is big enough to raise questions about systemic safety.At its recent peak, the total value of cryptocurrencies approached a trillion dollars. Even at recent diminished valuations, the total stands at some $300 billion.This could expose not just the speculators but also their creditors and intermediaries to significant risk.Regulators need to be watchful, so that the integrity of their financial systems is not put in jeopardy.Providers of electronic-payment and money-transfer services are closely regulated in most jurisdictions.Cryptocurrency suppliers, no less than those other firms, interact with the rest of the financial system, relying upon its wider infrastructure to continue functioning. These links need to be supervised — and if they’re being abused, they need to be cut.More from The Daily Gazette:EDITORIAL: Find a way to get family members into nursing homesEDITORIAL: Beware of voter intimidationEDITORIAL: Urgent: Today is the last day to complete the censusEDITORIAL: Thruway tax unfair to working motoristsFoss: Should main downtown branch of the Schenectady County Public Library reopen?