Numerous nations and markets are gradually embracing crypto and blockchain prospects. Unfortunately, the current crypto winter has slowed the development of these technologies. However, many still hope that things will be better after the storm.
Central Bank Governor Favours Privatising Crypto Sector
Evidence shows that the crypto sector is not yet dead. Numerous crypto companies have continued to reveal progress and future goals. Other financial industry leaders are also providing suggestions for improvement.
Recently, Australia’s central bank governor strongly advised advancing the cryptocurrency business. In reality, Lowe attended a G20 Finance meeting in Indonesia on July 17 with leaders from many nations. The forum discussed the impact of stablecoins and DeFi on the global financial systems.
Philip Lowe expressed his support for private sector crypto technology development during the conference. He believes the industry will benefit if the private sector handles such innovations. Additionally, if robust rules support these improvements, the terrifying risks related to cryptocurrencies will be mitigated.
Strong Regulations To Reduce Crypto-Related Risks
According to Philip Lowe, the crypto sector is risky for numerous reasons. However, the risks will be mitigated if the government supports the business or imposes a strict regulation on the operations.
Everyone is aware that the industry’s risks are tremendous. For example, existing stablecoins on the market can de-peg and lose value overnight. Moreover, the market has not yet recovered from the Terra USD and UST crisis, which precipitously lowered the value of the Terra Classic ecosystem.
By de-pegging from US dollars, stablecoins precipitated a massive market crash. The market was already on edge owing to the interest rate hike. Therefore, the fall of Terra could lead to devastating consequences. The following events caused investment losses of billions of dollars on the market. Even the worldwide crypto market capitalisation lost value.
Lowe believes these problems can be resolved if the government and private sector collaborate. As a result, the government will draft legislation while the private sector develops cryptographic technologies.
At the G20 conference, CEO Eddie Yue backed Lowe’s stance on scrutinising stablecoins in depth. If these coins are stable as they should be, there will be fewer risks in decentralised finance. Yue also reaffirmed that its technology and inventions would contribute to the improvement of future financial systems.
Lowe also doubted the concept of digital tokens proposed by central banks due to the significant development expenses involved. He’s not the only one paying attention to the price of a digital token issued by a central bank. In July, the National Association of Federally-Insured Credit Unions held identical views.
However, many other nations appear unconcerned about the project’s price. Countries like the Bahamas, China, and the European Union are experimenting with or developing CBDCs.
