Crypto has lost the ‘battle’ against national currency: BIS chief Agustin Carstens
Stock photo of a man holding a physical bitcoin while using his smartphone to invest in cryptocurrency. (Unsplash)
Cryptocurrencies
The argument that crypto is an alternative to fiat currency has been settled after last year’s turmoil in the digital asset sector, according to Agustin Carstens, head of the Bank for International Settlements.
“That battle is won,” Carstens said in a Bloomberg TV interview Wednesday. “A technology does not provide reliable money.
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The digital asset sector is still recovering from a $2 trillion rout and the collapse of Sam Bankman-Fried’s FTX exchange in November, which has turned into one of the most high-profile corporate crime cases in US history.
File photo of Bank for International Settlements (BIS) CEO Agustin Carstens in Washington, USA. (Reuters)
Bitcoin, for example, is down 65 percent to $24,150 from a peak near $69,000 in 2021. The crypto collapse and a series of related bankruptcies undermined the claim that tokens can be trusted as stores of value and mediums of exchange.
“Only the legal, historic infrastructure behind central banks can give much credibility to money,” Carstens said, adding that he expects a “strong statement from the Group of 20 for strengthened regulation of the digital asset sector.”
Crypto is a financial activity that can really only exist “under certain conditions,” he said.
Also speaking at the Monetary Authority of Singapore, Carstens said central banks’ digital currencies – or CBDCs – and tokenized deposits could help efficiency. He proposed the model of a unified blockchain under a public-private partnership where a central bank underpins trust in the CBDC.
Carstens touched on stable coins in the private sector in the speech. He said regulators must ensure that stablecoins do not harm investors and consumers or fragment the monetary system.
Stablecoins are crypto-tokens that are meant to hold a set value, such as $1, but some have exploded, leaving investors with losses.
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