Reserve Bank warns Aussies against poking around for “fashion-driven” cryptocurrencies

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The Reserve Bank of Australia (RBA) has cautioned Australian investors against speculating in digital assets as it calls into question the entire crypto sector.

Speaking to the Australian Corporate Treasury Association on November 18, the RBA’s Payments Policy Leader Tony Richards provided an overview of distributed ledger technology, crypto assets, stablecoins and central bank digital currencies (CBDCs).

In his speech, Richards asked questions about the validity and growth of crypto in 2021 as he targeted the amount of capital invested in memecoins such as Dogecoin (DOGE) and Shiba Inu (SHIB):

“The recent boom in this space is perhaps best illustrated by the fact that Dogecoin, a cryptocurrency that was launched as a hoax in late 2013, had an implied market cap of $ 88 billion as of June this year.”

“And the Shiba Inu token, which also appears to be devoid of useful features, is currently the ninth largest cryptocurrency with a market capitalization of around $ 26 billion,” he added.

Richards also claimed that the public attention attracted by crypto in 2021 “was undoubtedly fueled by influencers and celebrity tweets” as he disproved the reported scope of how widespread crypto really is in the country.

“Some polls have claimed that around 20 percent of the Australian population owns cryptocurrencies, and one claimed that Dogecoin alone was held by 5 percent of Australians. I have to say that I find these statistics a little implausible, ”he said.

Richards outlined three scenarios in which “current speculative demand for cryptocurrencies could reverse,” which he believes would leave digital assets with minimal use cases.

First, he argued that soon investors might be “less influenced by fads” and FOMO and instead pay more attention to warnings from regulators and policymakers.

Second, he said governments around the world could try cracking down on energy-intensive proof-of-work-based cryptocurrencies like Bitcoin (BTC) for crimes.

Related: Australian Crypto Firms Happy to Adopt Regulations, Senator Says

Commenting on Richards’ address, Steve Vallas, CEO of Blockchain Australia, refuted the speculative arguments against the entire sector, telling Cointelegraph:

“Some regulators keep an unhelpful and narrow focus on the speculative elements of the sector. This lens misses the remarkable infrastructure build-up that has taken place in recent years. “

Crypto-friendly Senator Andrew Bragg, a key figure behind the push to introduce robust crypto regulations in Australia echoed similar feelings, noting that “the RBA is short-sighted about cryptocurrency. The benefits and the value of the technology for economic efficiency are enormous. “