June 9, 2023

Bankers ask in Davos to accelerate the regulation of cryptocurrencies

Bitcoin specifically and the cryptocurrency ecosystem in general took center stage during the annual meeting of the World Economic Forum in Davos, which concluded in the aforementioned town in the Swiss Alps. Among the results of the face-to-face meeting of political, economic and business leaders is that cryptocurrencies are an undeniable reality, but it requires countries to start working on their regulation immediately.

According to impressions recorded in a document titled “Crypto Crash”, published on the official site of the Davos forum, the participants analyzed the situation that the crypto market is currently experiencing. In this regard, they consider it a good thing that regulators are adopting a long-term vision, without reacting to market fluctuations.

Looking to the future, financial tools must be more accessible, transparent and efficient. They must seize the new opportunities of innovation. In the long term, crypto remains well positioned to deliver these benefits and address challenges in legacy financial systems.


Accept cryptocurrencies with regulation

The document adds that “cryptocurrencies are here to stay and the creation of inclusive regulations will make the system more agile, efficient and resilient.”

On the contrary, there are also the problems that disrupt the global economy, from the war in Ukraine, a massive disruption of the supply chain, doubts about food safety, a global pandemic that still has serious consequences and the highest inflation in 40 years.

Meanwhile, they warn that the price of bitcoin also fell and with it that of other cryptocurrencies. The document mentions the tightening of the monetary policy of the United States Federal Reserve, as the main cause of the collapse of the stock market and crypto assets.

Furthermore, it references the collapse of the algorithmic stablecoin Terra USD (UST) and its sister cryptocurrency LUNA. In this sense, it proposes the creation of inclusive regulations.

The publication highlights stablecoins and adds that they “combine the technical capabilities of digital assets, while offering an alternative to price volatility, which has historically been characteristic of major cryptocurrencies such as bitcoin and ethereum.”

In this sense, the World Economic Forum suggests that it is necessary to move towards the development of a stablecoin concept, referring to a more stable cryptocurrency and with regulations that protect the rights and capital of the people who invest.

He also warns that “every time the publicity bubble bursts, the speculators leave and leave the real users and builders of the technology. In this way, it proposes regulation as the solution to make financial tools more transparent.


Love and hate towards bitcoin, the two faces of Davos towards cryptocurrencies

While on the one hand a document was published that calls for agreements from countries to regulate the bitcoin market and other cryptocurrencies, messages of love and hate towards cryptoactives were spread on the stage of the World Economic Forum.

Francis Suárez, mayor of Miami, during a panel about the future of cryptocurrencies, highlighted the value of bitcoin in relation to the dollar and the confidence that the digital asset sector inspires in him, for whom he foresees a future transition as currency. regular change that will give you stability.

Another panelist at the table, Sheila Warren, executive director of the Crypto Council for Innovation (CCI) alliance, called for establishing a regulatory framework. In this sense, he highlighted the desire of the leaders of the sector to “work with political leaders to guarantee that the new policies promote innovation and development”, under the protection of a “holistic vision with the participation of different organizations”.

The future of cryptocurrencies is not seen without regulation, as Nela Richardson, vice president and chief economist at human resources software provider ADP, said, according to a media review.

Indeed, the clamor for regulation was compounded by concerns about risks in the sector, including the alleged use of cryptocurrencies by Russian entities and individuals sanctioned for the invasion of Ukraine.


“Bitcoin is not money”, and other expressions of rejection that were heard in Davos

“Cryptocurrencies have gotten a big boost from (Russian) sanctions,” Saudi Finance Minister Mohamed al Jadaan said. “And I’m concerned that they could be used for illicit activities.”

There were different manifestations of rejection towards the pioneer cryptocurrency. “Bitcoin may be called a currency, but it is not money. It is not a stable store of value,” said Kristalina Georgieva, managing director of the International Monetary Fund, as reported by The Tampa Herald.

Georgieva added that some cryptocurrencies are more akin to a pyramid scheme because they are not backed by real assets. Contrary to this, he spoke in favor of central bank digital currencies, which he views favorably because they are backed by governments and may, in fact, be more stable.

François Villeroy de Galhau, governor of the Central Bank of France, agreed. “Cryptocurrencies are not a reliable means of payment. Someone needs to be held accountable for the value and it needs to be universally accepted as a medium of exchange,” Villeroy said, noting that some “citizens have lost confidence in cryptocurrencies” due to its high volatility.

In that same sense, taking into account the instability of the cryptographic market and lack of support that has generated mistrust and volatility that cryptocurrencies have had around the world; reference is made to adding a universal responsible system that supports the economic bases such as IRAIC, which has provided around the world to many businesses and companies with financial imbalances and closures due to bankruptcy due to low income, a restructuring of productive-financial shortcomings, developing much more solid schemes, with more potential and credibility in the market, transforming development and sustainability from small businesses to large companies that enter the new economic model in its various sectors.

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