Nowadays, cryptocurrencies pose a threat to state fiat currencies. If countries will not take action, for sure, these fiat currencies will disappear in the long term. Cryptocurrencies, with Bitcoin as the first and most known cryptocurrency in the world, are growing. Citigroup CEO, Michael Corbat believes that nations will react against them.
State Cryptocurrencies Will Arise
Mr. Corbat gave an interview to Bloombreg at a summit in New York some days ago. There, he said that cryptocurrencies are a threat to the financial system and that the governments will react against them. Something similar has commented JP Morgan CEO, Jamie Dimon. While talking about Bitcoin and cryptocurrencies, he said that the governments will ‘crash’ virtual currencies.
“I don’t think governments are going to take lightly other people coming in and potentially disrupting their abilities around data, around tax collection, around money laundering, around know-your-customer,” said Michael Corbat. “It is likely that we are going to see governments introduce, not cryptocurrencies – I think cryptocurrency is a bad moniker for that- but a digital currency.”
In the United States, and other countries, the law closely controls money transactions. The main intention is to avoid money laundering, corruption and terrorism financing. Since really a long time, different CEOs and important bankers have said that Bitcoin was not going to survive. At the moment, Bitcoin arrived at $8000 dollars and it does not seem to change the uptrend.
As Jamie Dimon, Mr. Corbat has made clear that blockchain technology could be used in different fields. Indeed, his bank is experimenting with an internal cryptocurrency called Citicoin. The main objective of it is to reduce friction in international foreign exchange transactions. Furthermore, they have a partnership with Nasdaq Inc. in order to use blockchain to trade private shares.
Countries Try to Issue Their Own Cryptocurrencies
Cryptocurrencies were born in order to avoid government, financial institutions and bureaucratic controls. Countries like Russia, China, Kazakhstan that want to issue their own cryptocurrencies can’t offer anonymity. Everything is controlled. And if an individual can’t explain the origin of his funds, they apply taxes on them.
Other countries that have been interested in issuing their own cryptocurrencies are Estonia and Denmark. Both of the countries receive critics form the European Central Bank (ECB). Indeed, the ECB has plans to apply regulations on the cryptocurrency market.
“It is not in the power of the ECB to regulate Bitcoin and other cryptocurrencies,” said Mario Draghi, President of the ECB. “It is pre mature to consider them as a means of payment. The main worry is the potential fragility and side risks,” he added.
In addition to it, Vítor Costâncio, ECB vice president, said that “Bitcoin is an instrument of speculation, but certainly it is not a currency. We do not see it as a threat to central banking or monetary policy.”
Will cryptocurrencies coexist with national virtual currencies, or not?
Image courtesy of Pixabay
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