The annual World Economic forum, which normally takes place in Davos, has pushed the five-day conference online this year.
Cryptocurrency Not a Fraudster’s Favorite Tool
The opening session titled “Resetting Digital Currencies” focused on “the opportunities posed by the rise of digital currencies.” The speakers’ panel on the topic included prominent names like Silver Lake Co-Founder Glenn Hutchins and Bank of England Governor Andrew Bailey.
Reflecting on cryptocurrency practices, Hutchins highlighted the common belief that Bitcoin is primarily used by criminals. Explaining the immutable nature of the blockchain technology behind digital currencies, he said that Bitcoin, “leaves a permanent, unalterable record, hence why almost all criminals using it are caught. It is fundamentally wrong to say that Bitcoin is mostly used for crime.”
His statement can be confirmed by the recent research conducted by blockchain data firm, Chainalysis. It states that criminal activity accounted for 0.34% of cryptocurrency transaction volume in 2020, down from the 2% recorded last year.
Hutchins also points out that due to cash being “untraceable and fungible,” up to 90% of $100 bills in the U.S. are “used for organized crime and tax evasion.”
Not a Stable Store of Value
Unlike Hutchins, Bailey took a much more negative view of digital currencies, claiming that cryptocurrencies such as Bitcoin are not the future for digital payments. He emphasized that the proper regulation is not yet ready, while the possibility of any currency being involved in any illegal activity remains to be a consideration in determining how regulatory frameworks are to be established through “defining where the public interest lies.”
According to Bailey, cryptocurrencies as they are still don’t have the right structure to work as a long-term payments method. “We’re still waiting for the right design and governance model for a “lasting digital currency,” Bailey said. He also recognized that people will be constantly searching for more stable, safe and well-designed cryptocurrencies. From this perspective, “stablecoins, such as Facebook’s Diem, rebranded from Libra, and central bank digital currencies were promising, but cryptocurrencies were not.”
This follows the Treasury’s Cryptoasset and Stablecoin consultation on Jan. 7, that was launched as part of the government’s more complex regulatory approach to cryptocurrencies, including stablecoins.