Less than a year ago in a small town in Switzerland, there was hope and optimism that crypto was finally breaking into the global financial system and a bright future awaited. That small town is Davos, home to the annual meeting of the World Economic Forum (WEF). This year the mood is far less optimistic as the ongoing FTX saga continues to cast its long shadows across the conference.
Crypto is still represented along the Promenade, the road outside the main convention center, however this time it’s more heavily focused on regulation and financial services than last year when it was an NFT paradise. Within the meeting, it’s the same industry figures as last year. Jeremy Allaire, the founder of Circle, and Mairead McGuiness, the EC commissioner for financial services, financial stability, and Capital Markets Union, have been espousing the same views as before about stablecoins and Central Bank Digital Currencies (CBDCs).
The main narrative at the moment from regulators is that crypto is bad and not to be trusted because of people like SBF. Meanwhile, central bankers are holding the line that stablecoins are bad but CBDCs are good. It seems many of them want to embrace the technology to the exclusion of the projects and companies that have worked tirelessly to develop it.
If we are to succeed in growing an integrated system where private crypto projects can work with government projects there needs to be some meeting in the middle rather than constant agitation and accusations. There is some hope that this is starting to occur as Deniz, our CEO explains, “We have witnessed a cautious appetite for crypto within the broader financial market. More and more companies are buying into Bitcoin but largely withhold investing into altcoins.”
He adds, “I believe massive inflows of liquidity will enter the crypto market via corporations once regulatory frameworks become solidified. Besides investments, we see increasing utilization of blockchain technology from banks and other traditional companies more and more each year. These partnerships are crucial for establishing crypto and blockchain companies as deeply integrated components of the overall global economy.”
Whilst SBF has given regulators more ammunition than they could ever have dreamt of, some delegates at the conference have spoken about the need for partnerships and forward-thinking initiatives such as Neha Narula, Director of the Digital Currency Initiative at Massachusetts Institute of Technology (MIT). Her view is an optimistic one that CBDCs can be beneficial and learn from private sector crypto projects about issues such as how to protect users’ privacy.
In her opening comments to the WEF panel discussion about CBDCs, said, “In our recent work at MIT we’ve said that CBDC has the opportunity to play an important role as a public good. Serving the public interest both as a form of money and as a public money technology. But so much of this outcome depends upon the design decisions that we make today.”
Design decisions are crucial and over the coming 12–18 months many of these will be tested and implemented, which is why it’s so important for the crypto community to work with governments and regulators to ensure as many of the benefits of the technology are realized as possible. Charles Hoskinson’s approach to working with governments and regulators is one of the many reasons we chose to build for Cardano.
As Simon, our CTO explains, “We tend to be aligned with Cardano’s approach and general thought process regarding the future of blockchain development. Their pro-integration stance is also something we see a clear benefit in promoting.”
At present many, if not all central banks, are being influenced by FinTech companies who see the benefit of leveraging the big data CBDCs can gather. If we fail to educate and work with them on the importance of privacy it’s obvious that corporations rather than the public will benefit most from their introduction.
Julio Velarde, Governor of the Central Bank of Peru demonstrated this point when he said, “We see the Central Bank Digital Currency as part of the solution for unbanked people. That is if we have a record of their transactions it will be easier for them to get credit. We have seen a lot of FinTechs interested in having this information.”
Meanwhile, Amir Yaron, Governor of the Central Bank of Israel drew the battle lines between CBDCs and stablecoins saying, “I think we’re all realizing we’re in the midst of a technological revolution in the payment system…and that’s why central banks are there.”
Adding, “We are seeing faster payments, smart contracts, e-money, crypto assets, stablecoins…CBDC could be the gateway, instead of stablecoin…between the new digital economy and the standard economy and cheap cross-border [payments].”
It’s apparent that education and dialogue are just as important for stakeholders looking at centralized blockchain technologies as it is for retail investors in the decentralized space. The greatest challenge crypto faces is the same one that has plagued it for many years, reducing maximalism and working together. Without collaboration and education, it will be easy for the media to continue to portray the space as being filled with infighting and reckless individuals like SBF.
It’s a point that Wilson, our COO explains, “We have kept education a priority since the very beginning. Since blockchain technology is relatively new and many people lack fundamental knowledge in this area, we know how important it is to put out factual content for our community to absorb.”
Adding, “We have consistently been releasing high-quality educational articles for over a year now. This, along with our YouTube channel of short educational videos, has given our community insights into why we are so passionate about the blockchain space. Delivering our information in a fair and factual manner has also given us credibility over time. We’re happy to continue our mission of education.”
It would be fair to say that the next 12 months between this year’s WEF meeting in Davos and the 2024 convention will be critical for the future development of crypto and CBDCs. With so much at stake, it would be a shame if the space continued to be mired with in-fighting and bad actors. To help shape the future it’s imperative that we stay part of the conversation in a collaborative and beneficial way.
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- Source: Plato Data Intelligence: PlatoData.io