The bankers and other financial professionals gathered at Davos can all agree that banks are secure and that cryptocurrencies are, to use the words of one participant, “inherently speculative.”
The audience laughed in agreement when Senior Minister Tharman Shanmugaratnam of Singapore remarked that cryptocurrency assets are somewhat weird.
This week, as the heads of the world’s largest financial organizations, convened in Switzerland for the annual gathering of the World Economic Forum, some attacked cryptocurrency, pointing instead to banks as a safe refuge for assets.
Even though cryptocurrency companies like Three Arrows Capital and FTX filed for bankruptcy during the economic turmoil of 2022, the traditional banking industry mostly avoided harm.
Colm Kelleher, the chairman of UBS, believes that this accomplishment proves traditional financial institutions are “systemically safe” as a result of years of regulation.
Although Kelleher believes in the blockchain’s core technology, “non-banks,” which include cryptocurrencies, have escaped the regulatory eye.
Respectfully, regulators have let the non-banking industry slip their minds, Kelleher remarked this week at the World Economic Forum.
The greatest threat today is non-banks, said Francois Villeroy de Galhau, a member of the Governing Council of the European Central Bank, citing Sam Bankman-Fried’s FTX.
“We need to rush to some urgent non-bank regulation starting with cryptos,” he later continued.
However, prominent Singaporean minister Shanmugaratnam made the argument that even regulating cryptocurrency using the same structure as conventional banking could be dangerous since it would legitimize the asset class.
“Is it preferable if we just make it crystal clear what constitutes an uncontrolled market and that any participation is at the participant’s own risk? “His question was rhetorical. He tends to agree with the latter view a little bit more.
Naturally, the crypto business, which banks consider a competitor, has a different perspective and is also arguing its point at Davos. According to the report, well-known cryptocurrency companies like Davos are throwing events and presenting the recent upheaval as a reset moment that will favor good actors.
