Ripple Swell 2020: clear rules and CBDC will encourage the adoption of cryptocurrencies
During the Ripple Swell 2020 conference, financial leaders actually discussed the regulatory framework for crypto assets and how cryptocurrency adoption can be transformed to attract more users.
The lack of policy towards cryptocurrency
With the advent of the cryptocurrency and blockchain industry, financial institutions around the world are taking a cautious approach to dealing with cryptocurrencies, with some moving faster than others in terms of creating a clear regulatory framework for digital assets. However, the mass adoption of cryptocurrencies still leaves much to be desired, and financial leaders have explained how the crypto industry could be promoted if some things were fixed.
Peter Kerstens, digital innovation adviser at the European Commission’s financial services Department, said the reason why digital assets have not been more widely distributed around the world is due to the lack of relevant regulations. He said that as soon as financial institutions will be able to adjust the digital assets as a financial instrument, followed by the adoption of cryptocurrencies. He explained:
“Regulated financial instruments tend to attract regulated financial institutions. In my opinion, the lack of a regulatory framework is one of the reasons why we do not see further development of this.”
Speaking on behalf of the United States, Kristen Smith, Executive Director of the Blockchain Association, acknowledged that the ever-changing nature of cryptocurrencies makes it difficult to establish a clearly defined US policy on crypto assets:
“This is an ecosystem that has evolved so quickly, and there are so many different applications of the technology. As awareness and understanding of these different types of crypto assets moves forward, we are starting to see some changes.”
She added that the United States still has a long way to go before a clear framework is set, but hinted that the country is making progress as several bills have been introduced “aimed at delineating different categories” of crypts.
Special adviser Angela Itzikowitz speaks on behalf of the Central Bank of South Africa. The country is making progress in regulating cryptocurrencies, but she said that crypto integration into the current financial system was a challenge. The fact that there is no need for a third-party intermediary for crypto transactions makes it difficult to regulate:
“Most of our legislation governing assets or securities requires a Central Issuer that is not present in the token or crypto space.”
Like Smith, she said that the fact that a token can change so much in nature makes it difficult to regulate, and explained:
“The token can also change its nature. It can start as a service token, but it becomes a security token during its lifecycle. So how is this regulated?»
CBDC implementation will change cryptocurrency for the better
Once clear rules are established for cryptocurrencies, digital assets can be integrated into the current financial system, which will revolutionize the industry.
The three blockchain executives also concluded that mass adoption of cryptocurrencies will be stimulated by Central banks launching their own version of Central banks ‘ digital currencies (CBDC). The fact that one country is launching a CBDC will already provide greater legitimacy to cryptocurrencies, which are often identified with illegal activities.
With the release of CBDC, confidence in the crypto space will increase, which can only mean a boon for innovation and integration of digital assets in the future, as it will serve to attract more users.