Central banks of many countries have been discussing the value of cryptocurrencies

In recent days, policymakers from central banks around the world have been speaking out intensively, either expressing their views or evaluating the value of cryptocurrencies.

Among these evaluations, they can be roughly divided into two categories: one is to recognize that Bitcoin is an asset, but not a currency and has no payment function; the other is to not recognize any value of Bitcoin.

Bitcoin ≠ currency, increase supervision

Developed economies, mainly in Europe and North America, currently recognize the asset attributes of cryptocurrencies and are more likely to increase regulatory frameworks rather than bans.

Kristalina Georgieva, managing director of the International Monetary Fund (IMF), warned at the World Economic Forum in Davos on Monday not to confuse crypto products with currencies . Any product that is not backed by a sovereign can be an asset class, but not a currency.

ECB's Christine Lagarde said that although cryptocurrencies have no value, they will support the digital euro. Lagarde said: "I have always said that crypto assets are highly speculative and very dangerous assets. My very humble assessment is that it is worthless, it has no basis, and there is no underlying asset that can serve as a safety anchor. It should be regulated."

Francois Villeroy de Galhau, governor of the Bank of France and member of the ECB's Governing Council, said: " I have always considered cryptocurrencies as assets, not currencies. For any currency, someone needs to be responsible, but this is not the case for so-called cryptocurrencies. In addition, the currency needs to be widely trusted and generally accepted."

Villeroy also said that the disorderly development of cryptocurrency assets, including the misnamed "stablecoins", risks "private" fragmentation. If crypto assets are not regulated, supervised and interoperable in a consistent and appropriate manner across different jurisdictions, it could disrupt the international financial system.

European Central Bank Executive Board member Leon Panetta said that cryptocurrencies are too risky to be a reliable means of payment and that public money in the digital age must remain a monetary anchor.

Bank of England Deputy Governor Cunliffe said: Cryptocurrency is being closely watched. "Cryptocurrency is now seen as a risky asset. We do not believe that there is a systemic risk in cryptocurrencies, but you can never be sure what will trigger a loss of confidence. With the launch of quantitative tightening, we will see investors withdraw from risky assets, and many retail investors do not understand cryptocurrencies."

In addition, the Governor of the Bank of Thailand also said in a recent speech that he still does not support the use of cryptocurrency as a means of payment.

Active supervision

Since January 2022, the U.S. Congress has introduced more than 80 bills related to cryptocurrency, digital assets, blockchain and tokenization, setting a record high. It is reported that these bills are mainly divided into 6 categories, namely: crypto taxation, central bank digital currency (CBDC), transparency supervision of digital assets and digital asset securities, blockchain technology support, sanctions and malware issues, and access and restrictions on the use of cryptocurrencies by U.S. officials.

Pablo Hernández de Cos, Governor of the Bank of Spain and Chairman of the Basel Committee on Banking Supervision, said that the cryptocurrency space and decentralized finance (DeFi) need to be regulated quickly to avoid the risk of financial instability. Hernández de Cos mentioned how the crypto-financial system should be brought under the purview of regulation before it becomes larger. "Despite this phenomenal growth, crypto-assets still only account for around 1% of total global financial assets and banks' direct exposure has been relatively limited to date. However, we know that these markets have the potential to quickly increase in size and pose risks to individual banks and to financial stability in general." Furthermore, he suggested a "proactive and forward-looking regulatory approach" to the topic, declaring that a balance can be struck between welcoming these technologies and mitigating their risks.

The Cypriot government said on May 20 that it has prepared its own legislation to regulate crypto assets, which it may implement before Europe finalizes a common regulatory framework.

Norway’s central bank says crypto assets and services need better regulation.

“Shielded” Bitcoin

Although cryptocurrencies are widely accepted in some countries, the number of countries and regions that have imposed bans on cryptocurrencies is also growing.

The Central Bank of Argentina (BCRA) recently announced that it would ban banks in the country from providing cryptocurrency services to customers . The BCRA statement said that banks are prohibited from providing services for any digital assets that are not regulated by the central bank. Since digital assets are not currently regulated by the Argentine government, this move is equivalent to a de facto ban. The statement said, "The measures ordered by the BCRA board of directors are aimed at mitigating the risks associated with transactions in these assets, which may affect financial service users and the entire financial system."

On May 23, the Governor of the Central Bank of Sri Lanka stated that Sri Lanka does not recognize cryptocurrencies.

Richard Byles, Governor of the Central Bank of Jamaica, recently made it clear that we stay away from cryptocurrencies .

The governor of Kenya’s central bank has expressed opposition to crypto trading, saying financial institutions supporting such transactions could lose their licenses.

Andrew Bailey, the governor of the Bank of England, recently spoke about the future of Bitcoin and cryptocurrencies when he was a guest on the "Jobs of the Future" podcast. He said that Bitcoin has no intrinsic value and is not a practical means of payment. Bailey believes that Bitcoin can only have extrinsic value, which just means that people want to own and obtain it as a means of storing value. When talking about which form of digital currency will evolve into widespread use, Bailey said, I don't think it will be cryptocurrency, and for Bitcoin, I don't think it is a practical means of payment. However, Bailey admitted that the underlying technology of Bitcoin does seem to have value, and blockchain and distributed ledger technology should be respected.

India's policy on cryptocurrencies is vague. However, the governor of the Reserve Bank of India, Shaktikanta Das, has repeatedly stated that cryptocurrencies have no potential value. He firmly believes that cryptocurrencies could "seriously undermine" the country's financial system. Das also pointed out that the recent correction in the cryptocurrency market proves that his cautious attitude towards cryptocurrencies is correct. He emphasized that the country's central bank is in agreement with the government when it comes to cryptocurrencies.