Central banks all over the world have showed a significant amount of interest in CBDCs since since the concept of CBDCs became more well known. However, there have been a variety of discussions on the applications of CBDCs and their capabilities.
CBDCs, stablecoins, and private cryptocurrencies have been contrasted by a variety of officials in terms of their usage and worth. The deputy governor of India’s central bank recently said that CBDCs could put an end to private cryptocurrencies.
Are CBDCs a Danger for Cryptocurrency?
In the meantime, Mikkel Morch, the executive director of ARK36, has shared his thoughts on the ongoing discussion regarding CBDCs and crypto. Morch is of the opinion that the United States dollar is unable to compete with decentralized cryptocurrencies such as Bitcoin.
This is due to the fact that there are restrictions placed on both the use of, and value placed on, the dollar when compared to decentralized cryptocurrencies. Morch is quoted as saying that the use of digital assets extends further than mere transactions, as reported by Cointelegraph.
Additionally, the executive made reference to a comment made by Jerome Powell at the beginning of the year. The chairman of the Federal Reserve made the following observations:
The government will not interfere with the coexistence of a regulated stablecoin and a possible “digital Dollar.”
Morch has indicated that the development of CBDC in Singapore does not cause the country to reject cryptocurrencies that are not backed by the state. He is even of the opinion that the issuance of a CBDC will lead to an increase in the use of non-sovereign cryptocurrencies and blockchain technology.
Morch did point out, however, that the majority of officials and central banks are still of the opinion that CBDC is dangerous. Morch has stated the following:
It is possible that a CBDC will lessen the need for private stablecoins. However, in order for there to be a market for stablecoins in the first place, there must have been one. Nevertheless, the market for stablecoins in Singapore is nowhere like as large as that in the United States.
The Monetary Authority of Singapore (MAS) Will Enforce Strict Cryptocurrency Regulation
The statements made by Morch are a reaction to the recent statements made by the Monetary Authority of Singapore (MAS) and the central bank of Singapore. Both organizations have made commitments to crack down severely and ruthlessly on “bad behavior” in the cryptocurrency industry.
On June 23rd, the Chief FinTech Officer of the MAS, Sopnendu Mohanty, voiced his doubts about the value of digital currencies. He is of the opinion that within the next three years, the state would create a digital currency backed by the state.
Mohanty brought up the recent calamities that have occurred in the cryptocurrency industry as well. They include the demise of Terra’s ecosystem, a liquidity difficulty at Celsius, and the bankruptcy of 3AC.
According to the official from MAS, these are the reasons why stringent regulations need to be implemented for the sector. In addition, the executive team from ARK36 offered their thoughts on Mohanty’s statements as well.
Morch expressed his appreciation for the MAS’s feedback. According to him, the recent problem with the company 3AC, which is based in Singapore, may have prompted the regulator to act.
Morch came to the conclusion that Singapore’s financial regulator needs to start regulating the cryptocurrency space if the rumors about how 3AC handled the funds of investors are true.