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Reserve Bank warns Aussies over punting on ‘fad driven’ cryptocurrencies

November 19, 2021 Coin Telegraph

The Reserve Bank of Australia has warned local investors that the speculative frenzy on crypto could soon dry up if policymakers and regulators step in.

The Reserve Bank of Australia (RBA) has warned Aussie investors about speculating on digital assets as it casts doubt over the entire crypto sector.

During a Nov. 18 address to the Australian Corporate Treasury Association, the RBA’s head of payments policy Tony Richards offered an overview on distributed ledger tech, crypto assets, stablecoins, and central bank digital currencies (CBDCs).

In his speech, Richards raised questions over crypto’s validity and growth in 2021 as he took aim at the amount of capital invested into memecoins such as Dogecoin (DOGE) and Shiba Inu (SHIB):

“The recent boom in this area is perhaps best illustrated by the fact that Dogecoin, a cryptocurrency that was started as a joke in late 2013, had an implied market capitalization as high as US$88 billion in June this year.”

“And the Shiba Inu token, which appears to be equally free of any useful function, is currently the ninth-largest cryptocurrency, with a market capitalization of around US$26 billion,” he added.

Richards also asserted that public attention captured by crypto in 2021 was “no doubt fueled by influencers and celebrity tweets,” as he refuted the reported scope of how widespread crypto adoption really is in the country.

“Some surveys have claimed that around 20 percent of the Australian population hold cryptocurrencies, and one claimed that Dogecoin alone was held by 5 percent of Australians. I must say that I find these statistics somewhat implausible,” he said.

Richards outlined three scenarios in which the “current speculative demand could begin to reverse” in crypto that would essentially leave digital assets with minimal use cases in his opinion.

Firstly, he argued that investors may soon “be less influenced by fads” and FOMO and instead pay more attention to warnings of regulators and policymakers.

Secondly, he said that governments across the globe may aim to crack down on energy-intensive proof-of-work-based cryptocurrencies such as Bitcoin (BTC), and finally he said the tax authorities may aim to remove anonymity to clamp down on financial crime.

Commenting on Richards’ address, Steve Vallas the CEO of Blockchain Australia refuted the speculative-focused arguments against the entire sector, telling Cointelegraph that:

“Some regulators maintain an unhelpful and narrow focus on the speculative elements of the sector. That lens misses the remarkable infrastructure build that has occurred in recent years.”

A disappointing view in the face of a global opportunity to lead for Australia.

"RBA warns of ‘faddish’ crypto crash" https://t.co/9AIGlwmNoc via @eyersj @jessicasier
— Blockchain Australia (@BlockchainAUS) November 18, 2021

Crypto-friendly Senator Andrew Bragg, who is one of the key politicians behind the push to introduce robust crypto regulations in Australia echoed similar sentiments, noting that “the RBA is short-sighted on cryptocurrency. The utility and value to the economy of the technology is enormous.”

Crypto poses imminent threat to financial stability: Bank of England Deputy Governor

November 16, 2021 Coin Telegraph

Bank of England

Bank of England's Sir Jon Cunliffe has urged British lawmakers to think “very hard” about the disruption integrating cryptocurrency with traditional finance could wreak.

Sir Jon Cunliffe, the Deputy Governor for Financial Stability at the Bank of England (BoE) crypto may pose an imminent threat to the traditional financial system.

During a Nov. 15 interview with the BBC’s “Today” program, Cunliffe argued that the rapid growth of digital assets and their integration with traditional financial services could soon pose systemic risks, stating:

“[Cryptocurrencies] are growing very fast, and they’re becoming integrated more into what I might call the traditional financial system.”

“So the point at which they pose a risk is getting closer. I think regulators and legislators need to think very hard about that,” he added.

While Cunliffe warned of integrating volatile crypto assets into the mainstream financial system, he dismissed adjacent concerns pertaining to the rise of stablecoins.

“There are proposals for new players who are not banks, including some of the big tech platforms and some of the social media platforms to come into the world and issue their own money,” he said. “I think that those proposals don’t yet exist at scale, so I don’t think we’re behind the curve here.”

The latest comments from Cunliffe come roughly one month after he addressed the Society for Worldwide Interbank Financial Telecommunication on Oct. 13, calling on policymakers to pursue crypto regulation as a “matter of urgency.”

Despite acknowledging that “crypto technologies offer a prospect of radical improvements in financial services.” Cunliffe argued that the sector poses significant risks through price volatility, a lack of consumer protection laws, and the absence of anti-money laundering (AML) provisions in the DeFi sector.

“How large those risks could grow will depend in no small part on the nature and on the speed of the response by regulatory and supervisory authorities,” Cunliffe said.

On Nov. 9 Britain’s central bank and Treasury released a joint statement outlining coming research into a central bank digital currency (CBDC) for the U.K market.

The duo will launch a consultation in 2022 to assess the viability of a UK CBDC, explore potential design features, and consider the positive and negative implications of issuing a CBDC.

The BoE added that “no decision” has been made to launch at CBDC at this stage.

Billionaire Ken Griffin slams crypto as ‘jihadist call’ against the greenback

October 6, 2021 Coin Telegraph

CBDC

Hedge fund manager Ken Griffin signaled out crypto as a threat to the US dollar, and stated that "I wish all this passion and energy that went to crypto was directed towards making the United States stronger."

Hedge fund billionaire Ken Griffin and former U.S. President Donald Trump have both slammed digital currencies as a threat to the U.S. dollar.

Griffin, the founder of the $38 billion hedge fund Citadel LLC, told the Economic Club of Chicago on Oct. 4, that crypto is "a jihadist call that we don't believe in the dollar." He expressed his dismay over the younger generation working on dollar alternatives in the crypto sector:

"What a crazy concept this is, that we as a country embrace so many bright, young, talented people to come up with a replacement for our reserve currency."

"I wish all this passion and energy that went to crypto was directed towards making the United States stronger," he added.

Griffin however doesn't not seem opposed to making money out of crypto in the future. He said that Citadel is yet to follow the plunge of other hedge funds and traditional financial institutions into crypto because of the “lack of regulatory certainty.”

The hedge fund manager said that U.S. Securities and Exchange Commission Chairman Gary Gensler was “spot on” in his comments from August, when he said that if crypto is going to achieve its potential it “needs to come within public policy frameworks.”

"Doing so will make it a smaller market, because it'll become a far more competitive market when there's regulatory clarity," Griffin said. "And that will be good. A small market, less people involved who are frankly just trying to make a quick buck."

Meanwhile former US President Donald Trump warned against the threat to the dollar from China’s digital yuan.

During an interview with Yahoo Finance’s Adam Shapiro on Oct. 5, Trump provided his take on China, the U.S. economy and the crypto sector.

Speaking on the Chinese government’s moves to ban crypto in the country led by Xi Jinping, Trump said the clampdown was a part of Jinping’s moves to squash competition as he works on “his own currency, whether it’s crypto or otherwise,” and suggested that the U.S. government should do the same:

“I'm a big fan of our currency and I don't want to have other currencies coming out and hurting or demeaning the dollar in any way.”

“If you look at a monetary system based on the dollar, if you start losing credibility, all of a sudden you're going to lose that strong monetary system,” Trump said. The controversial former president said the U.S. government’s “horror show” with the Mexican border and pull back from Afghanistan had also affected the credibility of the greenback.

Trump is also no fan of cryptocurrency. In late August, he stated that crypto was “potentially a disaster waiting to happen” as he questioned whether digital assets were “fake”:

“They [cryptocurrencies] may be fake. Who knows what they are? They are certainly something that people don’t know very much about.”

Crypto FUD