Reserve Bank of Australia warns citizens over ‘fad driven’ cryptocurrencies

Reserve Bank of Australia warns citizens over ‘fad driven’ cryptocurrencies

Reserve Bank of Australia (RBA) has recently warned Australian investors about speculating on virtual assets as the institution has cast shadow of doubt over the entire crypto industry.

At a November 18 address to the Australian Corporate Treasury Association, Tony Richards, Head of Payments Policy of RBA, had referred to an overview on distributed ledger technology, stablecoins, crypto assets and CBDCs.

Richards has, in his speech, raised questions over cryptocurrency’s validity and growth in the year 2021 as he aimed at the amount of capital invested into memecoins like Dogecoin (DOGE) and Shiba Inu (SHIB).

Richards said that the recent boom in the memcoin arena is best illustrated by the fact that Dogecoin, a crypto token that began as a joke in late 2013, had an implied market cap as high as US$88 billion in June 2021.

He added that the Shiba Inu token, which currently appears to be equally free of any useful function, has now become the ninth-largest cryptocurrency, with a market cap of around US$26 billion.

Richards has further asserted that public attention that is garnered by cryptocurrencies in 2021 was “fueled by influencers and celebrity tweets,” while he was refuting the reported scope of how widespread crypto adoption is in the country.

He cited that some surveys have claimed that about 20 per cent of the Australian population presently hold cryptocurrencies, and one even claimed that Dogecoin alone is being held by 5 per cent of Australians. He said that he finds “these statistics somewhat implausible.”

Richards has also outlined three scenarios wherein the present speculative demand “could begin to reverse” in crypto resulting in essentially leaving digital assets with minimal use cases as per his opinion.

Firstly, he has argued that investors may soon “be less influenced by fads” and instead pay greater attention to warnings of regulators and policymakers.

Secondly, he has said that governments around the globe might now aim to crack down on energy-intensive proof-of-work-based cryptocurrencies like Bitcoin. He finally said that the respective tax authorities might also aim at removing anonymity to clamp down on potential financial crimes.

Commenting on Richards’ speech, Steve Vallas, CEO of Blockchain Australia, has refuted the speculative-focused arguments against the entire crypto industry, said that some regulators maintain a very “unhelpful and narrow focus” on the speculative elements of the crypto sector.

Vallas stated that that kind of a lens then “misses the remarkable infrastructure build” that has been developing in recent years.

Another crypto-friendly Senator, Andrew Bragg, also one of the key politicians behind the move to introduce robust crypto regulations in Australia, has echoed similar sentiments, highlighting that the “RBA is short-sighted on cryptocurrency.” 

Bragg also said that the utility and value to the economy of the crypto technology are “enormous.”