01/03/2018 16:03 GMT | Updated 02/03/2018 11:48 GMT

Bitcoin Is 'Gigantic Ponzi Scheme' Used To Fund Terror, Says Diane Abbott

Labour would regulate the cryptocurrency, says Shadow Home Secretary.

Neil Hall / Reuters
Labour's Diane Abbott

The cryptocurrency Bitcoin is being used to fund terror and Labour would regulate it, Diane Abbott has said. 

The Shadow Home Secretary described the digital currency as “a gigantic Ponzi scheme” that could easily collapse and said the Treasury should look to clamp down on its spread.

In an interview with The House magazine, Abbott also said the war on drugs had “failed”  but stressed Labour was not in favour of decriminalising cannabis for recreational use.  

The cryptocurrency Bitcoin was created in 2009 in the wake of the global financial crash and uses encryption techniques to generate units of currency and verify money transfers. It operates independently of a central bank. 

Abbott said: “We are looking at the Bitcoin issue. One of the problems with Bitcoin is the extent to which it is just a gigantic Ponzi scheme.

“And if everyone took their Bitcoin money and tried to buy a new car all at once the whole thing would collapse.

“So, we are worried about the extent to which Bitcoin is a Ponzi scheme but we are certainly worried about how in the here and now it is being used to fund terrorist activity and that is something we are looking at.

“I think the people best placed to resolve some of the problems around Bitcoin will actually be people in the Treasury and people in the banking sector but I can’t say more than that.”

Asked if Labour would crack down on Bitcoin, Abbott said: “Labour overall thinks it’s important to have proper regulation of financial services. It was poor regulation of financial services which led to the 2008 crash and obviously regulating Bitcoin would be part of that.

“Generally, we are concerned about sound regulation of financial services.”

Mark Carney, the Bank of England governor, has also suggested cryptocurrencies may need to be regulated.

“The time has come to hold the crypto-asset ecosystem to the same standards as the rest of the financial system,” he said on Friday.

PA Wire/PA Images
Abbott with Labour leader Jeremy Corbyn

Asked about the debate around the decriminalisation of drugs, Abbott said: “What we all have to accept is that the war on drugs - particularly the international war on drugs - has failed. It’s turned countries like Colombia into narcotics paradises.

“And far from the war on drugs succeeding in any way what we have seen is a contributory stream of drug addiction with people in America being hooked on opiates and the consequences of being hooked on opiates is just as bad as heroin or cocaine or anything else and it’s cut a swathe of damage through middle America.

“So, the war on drugs isn’t working internationally - we are not seeing in this country falling numbers of addicted people so I think we do have to look at what we are doing and what’s working and what’s not working as the case may be.” 

Treatment for drug addicts, particularly those who find themselves homeless, should be a priority, said Abbott. 

“I certainly think we want to make it much easier for people to get treatment who are drug addicted,” she said. “In Hackney for instance it’s quite hard to get inpatient treatment which for some people is the only answer so certainly we need to look at better facilities for treatment for people with drug issues.

“And also, we need to weave together our work on homelessness with our work on drug addiction because many of the people you see here who are homeless are not just literally homeless they have drug and alcohol abuse problems.”

Labour is not in favour of decriminalising cannabis, however, Abbott said. 

“It is not Labour’s policy to legalise cannabis for recreational purposes,” she said. “We would not be discussing the legalising of cannabis for recreational purposes.”

When asked about Labour MP Paul Flynn’s recent efforts to legalise cannabis for medical purposes, she said: “Paul Flynn is a good friend and he has campaigned on this for years and years so I am always willing to listen to what he has to say. But at this point we are not in favour of legalising cannabis for any purpose. I don’t envisage us changing our position.”