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‘Robust’, ‘Stable’ Are Not the Words To Describe DeFi, Crypto

Cryptocurrency May 13, 2022 01:00PM ET
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‘Robust’, ‘Stable’ Are Not the Words To Describe DeFi, Crypto

    • Governor of the Bank of Spain said today’s crypto and DeFi cannot be linked with “robustness” and “stability.”
    • Basel Committee is still uncertain about how to deal with DeFi and cryptocurrencies.
    • In 2019, the committee released a paper discussing three guiding principles.

Today’s crypto assets have a long way to go before getting associated with words such as “robustness” or “stability,” says Bank of Spain Governor Pablo Hernández de Cos at the International Swaps and Derivatives Association (ISDA) annual meeting, saying it is still unknown if today’s DeFi and crypto ecosystem “will deliver net benefits to society or not.”

Chairman de Cos explained, on Thursday, that the Basel Committee jury is still uncertain on how to “best” deal with DeFi and cryptocurrencies despite a deeper understanding of the technology today.

“The jury is still out when it comes to ascertaining how best to harness their oft-cited promises and benefits while mitigating their risks and safeguarding financial stability.”

Before fully utilizing DeFi and crypto, de Cos explained that institutions should first explore how many existing problems can be better solved by existing financial architecture. He cited the G20 roadmap that was made to help enhance cross-border payments before cryptos got involved.

He also questioned how a decentralized financial system can be achieved in practice, since “some level of centralization is inevitable and structural aspects could lead to a concentration of power”.

Thirdly, the chairman suggested that the “noise” surrounding crypto should be filtered, pertaining to shilling and other bullish and bearish statements that could affect crypto prices.

“Most cryptoassets today cannot be associated with terms such as ‘robustness’ or ‘stability’,” stressed de Cos. “It’s not surprising to see that most central banks are exploring central bank digital currencies (CBDCs) as a potentially more promising route.”

To address the committee’s uncertainty of whether DeFi and crypto will deliver net benefits to society, de Cos reiterated its mandate to strengthen the regulation, supervision, and practices of banks worldwide.

In 2019, Basel Committee released a paper that discussed three high-level guiding principles. These were simplicity and caution, same risk, same activity, same treatment, and minimum standards.

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‘Robust’, ‘Stable’ Are Not the Words To Describe DeFi, Crypto
 

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Kevin Avila
Kevin Avila May 13, 2022 1:25PM ET
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Opposite. As Fiat increases rates… Crypto becomes even less atracive with each intrest rate rike from every central bank around the world… every rate hike, no matter the region it comes from, is bad for crypto.
Ford Lucas
Ford Lucas May 13, 2022 1:25PM ET
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I always believed in long-term investment as a savings vehicle for retirement as iam a passive investor my day job does not allow me to monitor stocks movement acting DCA is the only way or else if I have bigger capital pot I have to engage a financial advisor (WRAY THOMAS COOPER JR) I look up to him he made me understand that you must have a strategy, so I do not worry about short term performance that's why i follow his trade Q2 of 2022 i have acquired just $30k in my portfolio
 
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