As the cryptocurrency market rose slightly above $2.5 trillion, industry giants began to levy the decentralized industry’s growth as an inevitable phenomenon. However, a senior official from the Reserve Bank of Australia (RBA) argued otherwise, claiming that crypto’s eminent gains could be reversed by changing trends along with regulatory and monetary developments.
RBA’s head of payments policy, Tony Richards delivered a speech, regarding which of the three, Cryptocurrencies, Stablecoins, or Central Bank Digital Currencies are the future of payments, noting that there are manifold techniques to crush the crypto trend. These methods include a drop in the influence of fads, increased concern about the industry’s energy usage, as well as association with financial crimes, which can easily cause a reversal effect in crypto’s popularity.
“There are plausible scenarios where a range of factors could come together to significantly challenge the current fervor for cryptocurrencies…The current speculative demand could begin to reverse, and much of the price increases of recent years could be unwound.”, Richards said.
Is RBA against CBDCs?
While commenting on the destructible nature of crypto, Richards also pointed out that he does not entirely believe in CBDCs either, given that the issue is not of, whether an asset is regulated or unregulated, rather the question of if it is even required in an economy? However, he confirmed that as Central Banks across the world have begun testing CBDCs, RBA will also start research on the subject, despite its perspective that Australia does not need a CBDC.
“The bank acknowledges the argument being made internationally that with all the innovation that is occurring in the payments area, provision of a new digital form of central bank money for general purpose use could be important for safeguarding confidence in national monies and the role of fiat currencies.”, he added.
The majority of regulators globally are gravitating towards CBDCs since they offer centralized control, further enabling customer protection. Nevertheless, China already suffered its first case of fraud using Digital Yuan, henceforth, security cannot be guaranteed on decentralized blockchains or centralized e-wallets.