Bankers Enjoy Cryptocurrency Crash – Politico

With the help of Derek Robertson

It was a difficult extension of the world’s leading central bankerswho face pressure to tame high prices without crashing their economies now that they have defied persistent inflation their expectations. It doesn’t help them meet this challenge amid growing interest in cryptocurrencies, a technology that has been invented to completely bypass their power.

But the past few months have been more difficult for cryptocurrencies. So with the cryptocurrency markets melting away, central banks are not wasting this moment.

Yesterday, when the Bank for International Settlements released its 115-page pages Annual Economic Report, it devoted the last third to a detailed removal of crypto-finance and decentralized finance. The Bank for International Settlements (BIS) is the most institutionalized player – an international organization that acts as a bank for central banks and is also owned by central banks.

The report exploits the internal collapse of the algorithmic stablecoin Terra last month, arguing that the fiasco points to fundamental flaws preventing the success of any monetary system not backed by central banks.

In short, the report confirms that encryption isunsuitable as a basis for a monetary system,” citing issues such as scalability and trust. It concluded that “a system based on central bank money provides a stronger foundation for innovation.”

In recent years, papers published under the auspices of the bank have gone from dismissive to defensive in their dealings with cryptocurrencies. announced January 2020 Report Which polled the views of central banks around the world. But late that year, the cryptocurrency markets took off, and more recently, two small countries experimented with the national adoption of bitcoin as an alternative to sovereign currencies.

by April, paper Published in Emerging Market Economies widely discussed the risk that widespread use of cryptocurrencies or a foreign stablecoin could lead to sharp declines in the use of a country’s currency, undermining the ability of the central bank to implement monetary policy. The paper describes the existence of accessible payment systems for sovereign currencies as a “line of defense” against cryptocurrency adoption.

Meanwhile, the bank survey Posted last month It found that 60 percent of central banks are pursuing their own digital currency issuance with more urgency due to the growth in the stablecoin and cryptocurrency markets.

So the ongoing meltdown in the cryptocurrency markets and decentralized finance offers central bankers a welcome respite, as well as an opportunity to push for their own vision of the future.

The report argues that the current system must opt ​​for innovations associated with cryptocurrencies — such as distributed ledgers and smart contracts — and even take a stab at introducing the prose world of financial infrastructure in more poetic terms.

“A metaphor for the future monetary system is a tree, with a solid trunk provided by the central bank, the tree hosts a rich and vibrant ecosystem of private providers.”

The points being racked up against cryptocurrency’s viability are not entirely new. Indeed, in the argument that blockchain systems face inevitable trade-offs between scalability, security and decentralization, you cite the work of Ethereum founder Vitalik Buterin, who called this tension “Trilemma Capability‘, although Buterin and Bank have come to very different conclusions about the implications of Trelima.

Created Ethereum Buterin at the age of 19. To understand what kind of public character he cuts, look no further than this 2019 video, where he stars in a painfully embarrassing rap and dance routine that celebrates the technical upgrades of his blockchain token. On the other hand, central bankers enjoy an air of absolute power.

So, it’s remarkable to see their umbrella group publish an infographic of the “Expandable Buterin Trilogy” – not to mention asking readers to close their eyes and imagine a forest…

In this sense, the Bank’s report provides a snapshot of this moment in time, as one of the pillars of the global order fends off technological onslaught and demonstrates that it retains a central role in managing the future.

In the meantime between leakage Ro‘s After that impending reversal and the actual judgment that brought it down, the Russian collective Pussy Riot protest and performance band moved to the Texas State Capitol, hoisted a 45-foot-high banner and NFT . coinage to celebrate the occasion.

Over the weekend, the group’s affiliated DAO, or “Decentralized Autonomous Organization,” began a new effort to expand and support abortion access – Unicorn DaoCo-founded by Nadia Tolkonikova of Pussy Riot. On Saturday, the group opened a yard crypto walletLegalAbortion.eth, to act as a donation center for traditional abortion organizations such as Planned Parenthood that do not yet have a way to accept cryptocurrency.

DAO organizers will distribute funds from the wallet, which currently holds the equivalent of more than $10,000 in donationsto seven organizations including PPFA, NARAL and a few regional and state funds such as Fund Texas Choice, according to Twitter UnicornDAO. (Tolokonnikova is experienced in cryptographic altruism, and she also has Help find UkraineDAOwhich raised millions of dollars to support the country in its war against Russia.)

Pussy Riot is among the many activists trying to use the frenzy around cryptocurrency — and the tight, often frenetic sense of the community it generates — as fundraising tools, as we wrote about At DFD last week. Derek Robertson

Coinbase, the largest crypto exchange in the USis the latest US tech giant to find itself fending off European regulators.

As Bjarke Smith Meyer of Politico I mentioned todayThe company’s chief policy officer, Faryar Shirzad, traveled to Brussels last week to lobby regulators ahead of an impending European Union meeting. Markets in Regulating Crypto Assets. The European Union is widely expected to take a tough stance aimed at staving off fraud and money laundering, as well as reducing vulnerability to catastrophes such as the collapse of the volatile Terra coin.

However, Coinbase hopes to isolate itself from potential MiCA remote domains – that is, it does not want to be responsible for things like coin crashes, or for verifying the identities of its users.

“It is important that we do not put platforms … like us in a position where we take responsibility for things that are out of our control,” Sherzad told Bjarke. “Our goal is to make sure that the responsibility falls into the right place.” This “right place” may ultimately depend on the means, legal or otherwise, by which cryptocurrency experts make their money under a system that is more and more regulated day by day. Derek Robertson

Stay in touch with the whole team: Ben Shrekinger ([email protected]); Derek Robertson ([email protected]); Konstantin Kakays ([email protected]); and Heidi Vogt ([email protected]). Follow us on Twitter Tweet embed.

Ben Schreckinger covers technology, finance, and policy for POLITICO; He is an investor in cryptocurrency.

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