The value of many cryptocurrencies could crash when central banks decide to assert control over their monetary systems, says the Reserve Bank of Australia’s head of payments, Tony Richards, who warned about excessive hype around crypto and flagged an official response involving central banks issuing digital versions of cash.
In a speech pointing to the looming global regulatory backlash against thousands of private currencies which have emerged this year on the back of the soaring bitcoin price, Dr Richards said there are many “plausible scenarios” that could “significantly challenge the current fervour for cryptocurrencies”.
These included the regulation of their excessive energy consumption and focus on how they facilitate the black economy.
The market capitalisation of digital currencies, including bitcoin and ether, has surged to over $US2.6 trillion this year and thousands of different coins are being touted to investors.
While the rise is not yet an issue threatening financial stability, the RBA expects global central banks will move to keep control of digital finance, and will respond to bitcoin and all the other coins by issuing “central bank digital currencies” (CBDCs), a new form of digital money that would be a claim on the central bank.
