BIS Chief Agustin Carstens says Crypto has lost the fight against Fiat.
The banking ball certified CBDCs but advocates keeping an eye on stablecoins.
Despite the fact that the broader digital currency ecosystem is seeing a rise in the number of proponents, Agustin Carstens, the Head of the Bank for International Settlements (BIS) has doubled down on his criticism of the industry. According to a Bloomberg report, Carstens said that crypto has lost the battle against fiat, shunning the popular narrative that the nascent asset class will displace most fiat in the near future.
That battle has been won,” Carstens said in a Bloomberg TV interview earlier on Wednesday. “A technology doesn’t make for trusted money.
Carstens’ position was hinged on the imbalance that rocked the crypto ecosystem in the past year and led to the implosion of respected crypto platforms. Starting with the collapse of Three Arrows Capital (3AC) to the bankruptcy of Voyager Digital and Celsius Network, the industry has been recording some imbalances in liquidity distribution to date.
The more recent collapse of the FTX Derivatives Exchange notably sent shockwaves to the broader ecosystem. Prior to its bankruptcy, FTX stood in the gap as the lender of last resort to many crypto lenders including BlockFi. The abrupt collapse of the exchange, which at the time was the second largest in the industry, showcased how much of a lack of transparency exists in the nascent industry.
Riding on this, Carstens said only Central Banks as legalized by each country can give the needed financial stability to all citizens.
“Only the legal, historical infrastructure behind central banks can give great credibility” to money, Carstens said, adding he anticipates a “strong statement” from the Group of 20 for more unified global regulation for the digital asset sector.
The bouts of bankruptcies over the years have pushed industry leaders to call for such unifying regulations across the board.
BIS Chief on CBDCs
The BIS Chief also made comments on the emergence of Central Bank Digital Currencies (CBDC), a new legal tender being peddled by most Central Banks as a complement to fiat. The clamor to float a CBDC has always been to reduce the influence of Bitcoin (BTC) and other privately issued digital currencies.
These private cryptocurrencies are naturally cheaper and faster for remittances and CBDCs are now patterned to fit and compete with these growing alternatives. According to Carstens, these CBDCs and tokenized deposits can aid financial efficiencies.
The banking veteran and Chief also noted that Stablecoins should be closely monitored in order not to cause the fragmentation of the monetary ecosystem. Stablecoins are naturally supposed to shun the volatility that is peculiar to other assets like Bitcoin, Ethereum, and Solana (SOL) amongst others.
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As a result, these assets are designed and meant to be a safe bet for transactions. With the broader onslaught the crypto ecosystem has experienced over the past year, stablecoins have proven to be relatively unreliable drawing on the collapse of the TerraUSD (UST) algorithmic stablecoin.
Currently, the US SEC is also onto Paxos Trust for the issuance of BUSD stablecoin in what is considered an overstretched attempt to protect consumers. In all of these, proponents are optimistic that Bitcoin is just getting started and will win at the end of the day.
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