Since the idea of CBDCs became widespread, central banks worldwide have shown great interest. However, there have been various debates on the usage and capabilities of CBDCs.
Various officials have compared CBDCs, stablecoins, and private cryptos based on usage and value. Recently, the deputy governor of India’s central bank stated that CBDCs could kill private cryptocurrencies.
Are CBDCs A Threat To Crypto?
Meanwhile, the executive director of ARK36, Mikkel Morch, has commented on the debate between CBDCs and crypto. Morch believes the United States dollar cannot compete with decentralized crypto like BTC.
This is because the usage and value of the Dollar are limited compared to decentralized cryptocurrencies. According to Cointelegraph, Morch said that digital asset usage goes beyond simple transactions.
Also, the executive referred to Jerome Powell’s comment at the start of the year. The chairman of the Federal Reserve noted that:
“The government will not stop a regulated stablecoin from coexisting with a potential “digital Dollar.”
Consequently, CBDC development in Singapore does not make it reject non-state-backed cryptos, Morch stated. He even believes issuing a CBDC would increase the adoption of non-sovereign cryptos and blockchain tech.
However, Morch noted that most central banks and officials still believe that CBDC is risky. Morch stated that:
“It is likely that a CBDC can reduce the demand of private stablecoins. However, there must have been a market for stablecoins in the first place. However, the market for stablecoins in Singapore falls short of that in America.”
Singapore’s MAS To Enforce Strict Crypto Regulation
Morch’s remarks are in response to the recent comments of Singapore’s MAS (Monetary Authority Singapore) and central bank. Both entities have pledged to be hard and brutal on “bad behavior” in the crypto sector.
On June 23rd, Sopnendu Mohanty, the MAS chief fintech officer, expressed skepticism over the value of digital currencies. He believes the state will launch a state-backed digital currency in three years.
Additionally, Mohanty also mentioned the recent mishaps in the crypto sector. They include the collapse of Terra’s ecosystem, Celsius’ liquidity crisis, and the insolvency of 3AC.
The MAS official believes these are why stringent rules must be made for the sector. Furthermore, the ARK36 executive also commented on the remarks of Mohanty.
Morch acknowledged the comments of the MAS. He said the recent issue with the Singapore-based company, 3AC, may have spurred the regulator.
“If the rumors about how 3AC handled investors’ funds are true, Singapore’s financial regulator has to regulate the crypto space,” Morch concluded.
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