Central bank digital currencies (CBCs) are not a direct threat to cryptocurrencies like bitcoin (BTC), but they still carry risks compared to stablecoins, an industry executive believes.
According to Mikkel Morch, executive director of digital asset hedge fund ARK36, a state-backed digital currency like the US dollar need not be a competitor to a private or decentralized cryptocurrency.
This is because cases of use and value proposition of decentralized digital assets “often go beyond the realm of simple transactions,” Morch said in a statement to Cointelegraph on Thursday.
The executive referred to Federal Reserve Chairman Jerome Powell, who stated earlier this year that the US government would not prevent a “well-controlled, privately issued stable” from being at the same time as a digital dollar. potential from Nutrition.
So the CBDC’s active involvement in development does not mean that other countries like Singapore are hostile to non – state cryptocurrencies, Morch said. The leader suggested that the deployment of CBDC could even “facilitate the proliferation of non-dominant cryptocurrencies and blockchain technologies.”
However, the CBDC concept of stable tires carries some risk, Morch noted, saying:
“However, the FAW can reduce the role and demand for privately issued stable tires, provided there is already a market for stable tires in the country – which is larger in the US than in Singapore. ”
Morch’s remarks came in response to a pledge by Singapore’s financial regulator and central bank to be “relentlessly violent and harsh” on any “misconduct” by the cryptocurrency industry.
On June 23, the head of financial technology for the Monetary Authority of Singapore (MAS), Sopnendu Mohanty, expressed serious doubts about the value of private cryptocurrencies. He also said he expected to launch an alternative to state support within three years.
Mr Morch ARK36 also linked the latest comments from Mohanty to recent dramatic developments in the cryptocurrency industry, including the failure of the Terra ecosystem last month, the liquidity crisis of the Celsius cryptocurrency lending platform and the insolvency of Three Arrows Capital.
Read also: Stablecoins highlights “structural vulnerabilities” of cryptocurrencies – Federal Reserve
Morch specifically suggested that MAS ‘s views on going raw make much more sense when you consider that Three Arrows Capital, also known as 3AC, is a Singapore – based company. “If half of the rumors about how the fund has managed its clients’ capital are true, it’s no surprise that Singapore’s financial authority sees the need for more regulation in this space,” he said.