Speaking at the official G20 meeting, Philip Lowe, the governor of the Australian central bank, stated that privately issued digital assets can be beneficial. Reports published by Reuters show that Philip Lowe had a conversation about consumer-facing digital assets during the online streamed meeting.
Lowe stated that privately issued consumer-facing digital assets could outperform the tokens issued by central banks if they could be properly regulated. A similar voice was heard at the meeting where the head of the Hong Kong Monetary Authority stated that better regulation of private tokens could potentially reduce the risks of DeFi projects.
Rise in stablecoins paved way for CBDCs
As stablecoin development increased in the crypto realm, governments began to propose ideas to develop central bank digital currencies. The real research started for stablecoins with the fall of TerraUSD and its entire ecosystem.
“If these tokens are widely used by the community, they should be backed by the state, or regulated, just like we regulate bank deposits,” lowe.
He also stated that unlike central bank innovations, private entities are better at bringing in better solutions and innovations. Discussions at the meeting also revealed that much work remains to be done to create a robust regulatory system for digital assets.
The catastrophic fall of TerraUSD and the prolonged bear market where several companies struggled to remain robust have increased the need for a regulatory framework. A unified framework is also needed to mitigate risk and protect users’ money.
Even due to the bear market and difficult market conditions, cryptocurrency and the underlying technology will thrive, stated HKMA CEO Eddie Yue. The crypto market seems to have slowly come back to life, as is the entire market trade in green.