The argument that crypto is an alternative to fiat currency has been settled following last year’s turmoil in the digital-asset sector, according to Agustin Carstens, the head of the Bank for International Settlements.
(Bloomberg) — The argument that crypto is an alternative to fiat currency has been settled following last year’s turmoil in the digital-asset sector, according to Agustin Carstens, the head of the Bank for International Settlements.
“That battle has been won,” Carstens said in a Bloomberg TV interview on Wednesday. “A technology doesn’t make for trusted money.”
The digital-asset sector is still licking the wounds of a $2 trillion rout and the November collapse of Sam Bankman-Fried’s FTX exchange, which has morphed into one of the highest-profile corporate crime cases in US history.
Bitcoin, for instance, is down 65% 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 relied on as stores of value and mediums of exchange.
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“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 strengthened regulation of the digital-asset sector.
Crypto is a financial activity that can really only exist “under certain conditions,” he said.
Carstens also spoke at the Monetary Authority of Singapore, saying that central bank digital currencies — or CBDCs — and tokenized deposits can aid efficiency. He proposed the model of a unified blockchain under a public-private partnership where a central bank underpins trust in CBDCs.
Carstens touched on private-sector stablecoins in the speech. He said regulators must ensure stablecoins don’t harm investors and consumers or fragment the monetary system.
Stablecoins are crypto tokens that are intended to hold a set value, for example $1, but some have blown up, saddling investors with losses.
For crypto market prices: CRYP; for top crypto news: TOP CRYPTO.
–With assistance from Michelle Jamrisko.
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