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Senators and regulators explain why the $60 billion collapse of a major cryptocurrency is not the industry's Bear Stearns moment
It can be used as an alternative to gold by the CEO of the largest bank in Southeast Asia, DBS, he says. He also said that regulating crypto 'outside of the formal banking system' is not a good thing to do.
DBS’ CEO on Cryptocurrency and Regulation
At the recent Economic Times Global Business Summit, DBS Bank Group CEO Piyush Gupta discussed cryptocurrencies and its regulation. DBS is the largest bank in Southeast Asia in terms of assets. Gupta was quoted in the Economic Times as saying:
I don’t think that cryptocurrencies will become money as we know it, but it can be an alternative to gold and its value.
“The other big challenge [of cryptocurrencies] is volatility in value. If you want to use this to pay for something, you don’t know what it’s costing you,” he elaborated. “Today cryptos are a potential source of speculated value, it’s unlikely that this is a source of money as we know it.”
The executive said that central banks across the world should consider bringing cryptocurrency into the regulated space. He stated:
Regulating it out of the formal banking system is an unwise thing to do, as you wish to push it out into the unregulated space and then you have no way of creating any guard rails.
“Nobody knows who owns private money, so it is subject to misuse,” he stressed, adding that this issue is what the governor of the Indian central bank, the Reserve Bank of India (RBI), is so concerned about. He added, “monetary systems across the world have flagged off AML and KYC issues pertaining to crypto.”
The DBS CEO also talked about central bank digital currencies (CBDCs). Noting that “CBDCs come with its own set of challenges, if you go direct, every citizen opens a direct account with the central bank and it disburses the CBDC directly,” the CEO described:
The downside of this is it will disintermediate the existing banking system, therefore you make the process of credit creation the onus and responsibility of the central bank alone and they don’t want that.
DBS, Gupta's bank, has been providing cryptocurrency services to some of its clients for quite some time. In December 2020, the bank will launch a full-service digital asset exchange. Since then, the platform's crypto business has grown rapidly. In February, the bank stated that it intends to offer cryptocurrency trading for retail investors this year.
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