Bankers and government officials around the world are proving more welcoming to crypto than ever before. Tharman Shanmugaratnam – Singapore’s Central Bank Chairman – recently stated that cryptocurrency has a place in the country’s financial sector. All it needs are some regulations around illicit finance.
A Place For Stablecoins
The chairman showed his support at the Asia Financial Markets Forum on Wednesday. He said that the technology’s financial use-cases could extend beyond those of “pure speculation” and “illicit finance.”
The minister’s interest appears most concentrated in stablecoins, which he believes have a role to play in traditional financial systems. However, he acknowledges that such assets must be regulated to combat their use for “illicit finance.”
This appears to be a common perspective among regulators. Jerome Powell – Chairman of the US Federal Reserve – said he has “no intention” to ban cryptocurrencies but shows heightened concern for how stablecoins are utilized. Likewise, SEC chairman Gary Gensler has referred to stablecoins as “poker chips” at the casino gambling tables.
For Shanmugaratnam, however, stablecoins offer great economic benefits, despite their associated risks.
“I think the future will be one where regulated Stablecoins will have a useful role in a traditional payment system that innovates and becomes more interoperable across borders for cheap, fast, and instant payments,” he said.
The central bank said they are remaining open-minded on cryptocurrency altogether in the name of technological innovation. Singapore has recently been building its status as a global crypto tech hub. A survey this summer showed that half of Singaporeans own cryptocurrencies.
‘Fintech,’ Not ‘Crypto’
The minister refrains from using terms like ‘crypto’ or ‘cryptocurrency’ and instead approaches digital assets as ‘Fintech.’ As he sees it, financial technologies are expanding financial services to the unbanked while forcing traditional financial systems to improve.
To call such assets ‘currency’ is foolish, however, as their volatile prices make them unsuitable as a medium of exchange.
“If you have an instrument that is volatile in pricing, it’s never going to become money,” he said. “It’s going to be a speculative asset, for both the wise and foolish.”
El Salvador remains the only country to make Bitcoin legal tender. To adjust for Bitcoin’s price fluctuations, the nation’s state wallet “Chivo” allows recipients of Bitcoin to automatically convert their earnings into fiat money.
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