Cryptocurrencies rule the virtual world. There are no actual rules attached to them, unconfined as they are by physical boundaries. Yet, real-world governments and other authoritative bodies are now striving to change things. They wish to bring crypto investments and trading within the boundaries of certain regulations and standardizations. Learn crypto credit cards before investing in crypto.
Finance ministry officials belonging to G20 economies, regulators, and central banks come under one umbrella – The Financial Stability Board (FSB). This Board is now wondering how to tackle digital currency assets. The focus is on Bitcoin and Ethereum, since they are the gold and silver standards of the crypto arena.
Similarly, the EU (European Union) is keen to launch an extensive set of standards for crypto enthusiasts. It will permit supervising and authorizing crypto investors and traders.
The Central Bank of Ireland, commonly known as CBI, is the latest to join the band of concerned entities. It wants potential crypto investors to the risks of trading in digital currencies.
CBI reiterates what the leader of the awareness campaign, the European Supervisory Authorities, is saying. Experimenting with crypto-assets may prove risky, for everything is based on speculation in a virtual world. The major concern is for retail clients. They might not find it suitable for investments, exchange of currencies, or making payments.
Ireland and Digital Currencies
This awareness campaign is gathering momentum across Europe. Warnings are being issued against falling prey to misleading advertisements, especially those circulating on social media websites. The Director General Financial Conduct, Derville Rowland, feels that people become carried away by messages that appear extremely positive on the surface. However, their reality is quite different. Gabriel Makhlouf, the Governor of the Central Bank of Ireland, echoes these thoughts.
Ireland has not been in favor of regulating cryptocurrencies and has not yet done so. Yet, Crypto Head research feels that the country is ready for them. In fact, Ireland ranks 6th on the list of 10 crypto-ready nations in the world.
Crypto Head research’s conclusions may be attributed to the fact that the Irish Government permits ownership and usage of digital currencies. Furthermore, there are 35 crypto ATMs scattered across the nation. It works out to 142,211 customers per ATM, within a boundary of 775 square miles.
CBI and CBDC
Ireland’s authorities are not interested in trusting Bitcoin and Ethereum. Therefore, CBI is toying with the idea of creating a Central Bank Digital Currency (CBDC). It would be a kind of digital Euro. CBDC would be a virtual asset, co-existing with physical Euros (banknotes and coins). It would not be a substitute for the real stuff!
CBI’s CBDC would have the backing of the European Central Bank (ECB), Therefore, it would be fundamentally different from other digital currencies. The CBI Governor is all in favor of cryptos and CBDC. At the same time, he is concerned about the anonymous environment in which cryptos and CBDC will function. It seems impossible to eliminate the risks of criminal activities and money laundering.
Nonetheless, CBDC seems inevitable, with so many people in favor of it. For instance, Governor Makhlouf believes that its introduction will bring about a fundamental change in the Euro’s financial architecture.
Apart from this, other CBDCs are also in the offing. Rishi Sunak, the UK Chancellor, believes that Britcoin (CBDC) will enter the picture, to co-exist with real cash.
The FSB continues to monitor the crypto marketplaces. Regulators watch them too, worried that there could be a meltdown in digital assets due to volatile marketplaces. There is no denying that the Russia-Ukraine crisis is causing all these apprehensions. There is also the fear of how a meltdown would affect the global financial sector.
In the meantime, CBI is formulating some strategies of its own. One of them is awarding a fintech e-money license. This company is Gemini Payments. Gemini Payments is a cryptocurrency exchange run by the Winklevoss brothers. Now it may develop and disburse services related to electronic money.
The FSB is giving serious thought to DeFi (decentralized finance) too. Due to decentralized blockchains, investors/traders may borrow, save, or lend digital currencies. They do not need to be accountable to cryptocurrency exchanges or banks. Cybercriminals are extremely comfortable in the DeFi atmosphere!