Cryptocurrency has disruptive potential

Jan Bellens, EY Global Banking and Capital Markets Partner, said in an interview with Channel NewsAsia recently: "EY firmly believes that cryptocurrencies have the potential to disrupt the market and will have a huge impact on the current market." However, practitioners have noted that there are still some short-term issues that need to be resolved in order for this technology to achieve its maximum potential and successfully become an international currency. Jan Bellens believes that as long as the two key issues of安全性and "充分了解你的客户" can be solved in the short term, then in the long run "cryptocurrency will be a far-reaching and major innovation."

Relationship with the market

"Cryptocurrency can bring many benefits, especially to emerging markets," Bellens said. When it comes to making asset transfers easier and cheaper, Bellens said blockchain technology has great potential, especially in regions where payment and banking infrastructure are underdeveloped. "It is crucial that a line of code can be transmitted on the Internet or mobile phones, which makes it relevant to existing markets."

Although the acceptance of cryptocurrencies is still limited to a certain extent at this stage, this is because central institutions as third parties will set some rules to limit the development of decentralized and anonymous currencies. Therefore, "the development of cryptocurrencies is driven by the needs of individuals, which makes cryptocurrencies an international currency." Bellons said.

Massive security risks

Despite the benefits that cryptocurrencies offer over traditional payment systems, there are still issues that need to be addressed, Bellons added, and those are around security and crime prevention: “The reality is there are massive security risks. There are a lot of cases where virtual currencies have been involved in criminal activity and security risks.”

In the long run, the near-anonymous nature of cryptocurrencies makes the technology very popular in the criminal world, as cryptocurrencies make it easier and more anonymous to transfer large amounts of money across borders.

Bellon believes that the use of cryptocurrencies in criminal areas is the main reason for the current regulation of cryptocurrencies. The current acceptance of cryptocurrencies is not very high, and the number of merchants accepting Bitcoin as a transaction currency is also limited, which greatly limits the circulation of currency between merchants and individuals.

The Future of Cryptocurrency

“We believe there are many issues that need to be addressed and regulation put in place to ensure that cryptocurrencies can become viable currencies.”

Bellons believes that these issues should be taken seriously, for example, security is one of the issues that needs to be addressed urgently. "Our surveys in the global banking industry and other industries show that security risk is the biggest risk currently faced by consumers," he explained, "Security issues require a combination of personal and external regulatory adjustments."

Bellons pointed to the relationship between criminal activity and cryptocurrencies, which has made merchants and individuals skeptical of cryptocurrencies as a form of transactional currency. “The trust issue in this technology needs to be addressed.”

“The technology needs to establish itself as trustworthy and acceptable to merchants and individuals, without getting caught up in the trap of being heavily restricted by regulators. It also requires a better understanding of the customers who use cryptocurrencies, which will reduce the rate at which cryptocurrencies are used for criminal activities.”

In addition to the need to apply the "know your customer" principle, Bellons also stressed the importance of税收, citing the IRS's announcement that Bitcoin and other cryptocurrencies are considered assets rather than currencies. "There is a long way to go," Bellons said, "and many regulatory issues and contractual issues need to be resolved in the near term."

Finally, Bellons concluded that, however, if the above issues can be resolved, EY firmly believes that cryptocurrency has the potential to serve as an efficient and convenient world currency.

About EY Global Blockchain Group:

Ernst & Young, one of the world's four largest accounting firms, is committed to building a better business world and encouraging and advocating innovation and development in the new technological economic environment.
Ernst & Young has established a Distributed Infrastructure working group around the world, whose members are composed of professional service personnel from more than 20 Ernst & Young local offices in America, Europe, Asia, etc., including high-tech, financial and other industries. In addition to providing professional services, the global team regularly shares the latest progress and industry applications of global blockchain technology to better support the application and promotion of distributed technologies including blockchain technology. The latest sharing.

Source: EY Global Blockchain Group
Editor: Meng Dada