Cryptocurrencies such as bitcoin will ultimately become regulated, according to Sweden’s Riksbank Governor Stefan Ingves.
“When something gets big enough, things like consumer interests and money laundering come into play,” Ingves told Bloomberg. “So there’s good reason to believe that [regulation] will happen.”
Meanwhile, the government is already in the process of tightening standards for crypto exchange platforms according to Sweden’s financial markets minister, Asa Lindhagen.
However, she described the process more as a “work in progress at the international level.” She additionally called the risk of cross-border money laundering with cryptocurrencies a “very important issue.”
Central banker voices
While not condemning cryptocurrencies outright, Ingves has lent his voice to an outpouring of public opinions from central bankers.
While many are merely skeptical, others have taken more hardline positions against cryptocurrencies. For instance, European Central Bank Vice President Luis de Guindos said crypto investments have “weak fundamentals” and are not real assets.
Additionally, Bank of England Governor Andrew Bailey warned that cryptocurrencies have no intrinsic value. He also acknowledged that their “huge enthusiasm” was “dangerous.”
At the same time others have taken a more nuanced perspective to assets powered by digital ledger technology.
Recently, Bank of Japan Governor Haruhiko Kuroda called bitcoin trading speculative and volatile, saying “it’s barely used as a means of settlement.” On the other hand, Kuroda made an exception for stablecoins since they have assets to back up their value.
Federal Reserve Chair Jerome Powell shared a similar perspective about stablecoins but said their protection was not enough.
However, taking advantage of the benefits of stablecoins while providing proper protection would be a reason to issue a central bank digital currency (CBDC).
It turns out that Sweden is among the countries with the most advanced CBDC projects to date. Recently, the Riksbank announced it would be working with a commercial lender in the next testing phase of its CBDC.
The tests will focus on how the country’s proposed digital currency, the e-krona, would handle payments in the real world.
The use of cash in Sweden is largely evaporating, so authorities want to ensure that cryptocurrencies don’t fill the void. Ingves previously estimated Sweden could issue its e-krona in about five years. He noted that regulation of cryptocurrencies “will probably come at different times in different areas.”
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