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At the recent GDEC 2023 conference, Ravi Menon, chief executive of the Monetary Authority of Singapore (MAS), criticized Bitcoin and similar digital currencies, questioning their viability as a form of money.
Menon claimed that private cryptocurrencies, including Bitcoin, have “failed the test of money miserably,” primarily due to their volatility and their use as vehicles for speculation rather than stable stores of value. This outlook aligns with growing skepticism among financial authorities about the usefulness of cryptocurrencies in everyday financial transactions and savings.
However, Menon’s reference to Bitcoin as a “private cryptocurrency” deserves scrutiny. Unlike truly private digital currencies that operate on permissioned or restricted ledgers, Bitcoin is fundamentally public and operates on a decentralized and transparent blockchain. This misclassification may raise questions about the general understanding of cryptocurrency classifications among financial regulators and the need for a more nuanced conversation about the diverse nature of digital assets.
Delving further into Menon’s vision, he anticipates a future monetary system comprising three main elements: central bank digital currencies (CBDCs), tokenized bank liabilities, and well-regulated stablecoins. According to Menon, this triad could offer the stability and regulation that current cryptocurrencies lack, potentially leading to a more integrated and regulated digital financial environment.
THE Video clipwhat was reported by Bloombergcontains the following statement by Menon.
“I think private cryptocurrencies, bitcoins and the like have failed the money test miserably because they cannot hold their value. Most attraction is a means of speculation.
No one keeps their savings in these things. People buy and sell these things to make quick money. I don’t think it meets the money test.
So, private cryptocurrencies, which are native digital tokens, unfortunately do not pass this test. So I think they will eventually exit the scene, leaving these three components, CBDCs, tokenized bank debt, and well-regulated stablecoins, as the three prongs of a future monetary system.
Ravi Menon’s comments offer significant insight into the evolving regulatory perspective on digital assets. While his criticism regarding the speculative nature of digital currencies like Bitcoin has merit, the mislabeling of Bitcoin as a private entity points to a broader conversation about the diversity of the digital asset ecosystem.
Most notably, given MAS’ seemingly progressive stance on digital assets, it is remarkable to hear the CEO classify Bitcoin as a “private” asset.
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