Why Central Banks are Against Crypto; One obvious truth we all can’t shy away from is the stern opposition to Cryptocurrency by Central Banks. Ever since the emergence of Cryptocurrency on the global scene, various Central Banks in their respective jurisdiction has opposed it. The stern opposition by these principal financial institutions also reflected in the attitude of the International Monetary Fund. The International Monetary Fund overtly decry the decision of El Salvador to adopt Bitcoin as a legal tender.
In their defense, these financial Institutions cited the volatile nature of Crypto as a major reason. They also cited reasons like money laundering, financing terror, and tax evasion for opposing Crypto. Nevertheless, crypto-friendly countries have proven that cryptocurrency if well regulated can resist those concerns. Instead of protecting the industry, these financial institutions have devised a means of crippling it with heavy taxes. Another hypocritical approach of Central banks is the introduction of the Central Bank Digital Currency; a digital version of Fiats.
Why Central Banks are against Crypto
Obviously, Financial Institutions have come to realize that the future of finance will no longer hang on Fiats. The emergence of various Cryptocurrency and Stablecoins has indicated this indestructible future. While they’ve come to realize this, the fear of not being part of the future is a major reason they’ve opposed it. This definitely answer why Central Banks are Against Crypto. Meanwhile, the introduction of CBDCs is to silently jump into the salvation ark while sinking crypto with taxes.
Additionally, the libertarian ideology of cryptocurrency will effectively overthrow the control of Central Banks over finance. With the worldwide adoption of this ideology, Central banks will effectively become irrelevant. Nonetheless, the libertarian ideology is spreading to other aspects of human life. Lately, Tech Specialist is now clamoring for the worldwide adoption of Web 3.0 another innovation in blockchain technology. If not tamed, this ideology will not only spread to Finance, Internet, and Gaming alone, it will spread over to other areas. A development that some regulators are trying to stop before it emanates into global culture.
On a fair note, the dangers attached to Web 3.0 and Cryptocurrency is starting to surface, most especially Web 3.0. According to the theory of this technology, Big Tech companies will no longer provide internet services such as social media and browsers for people. Instead, every individual will have sole control over their data and how they use the internet. The negative side of this development is that there won’t be regulations against hate speech, pornography, scam, and other ill vices. The same applies to cryptocurrency, the absence of proper monitoring can leave it at the disposal of Fraud, Terrorism, and other illegal activities.
Solution
However, if Central Banks are truly concerned about these dangers they should look towards establishing regulations to stop them. Their attention shouldn’t be on taxes and inventing CBDC to tackle Crypto. In India, we’ve seen how heavy taxation can cripple Cryptocurrency, while Germany has shown how to best embrace crypto.
Furthermore, instead of the stand of these central banks against crypto, they can effectively explore the benefits of the industry. We all can’t deny the reality that indeed, crypto entails a lot of opportunities. These opportunities are beneficial to both individuals and the government. Just like Turkey, Countries can embark on adopting crypto education as part of their curriculum. This will further familiarize citizens of the country with the opportunities in the industry.
In addition, Countries can also take inspiration from El Salvador which acquired more Bitcoin during the dip and then sell-off during the price increase. While the volatile nature of Crypto can be a strong factor against that, Countries can embrace crypto to execute certain projects.
Dangers attached to the continuous opposition
Above all, Central banks stand to lose more if they continue to lobby against Crypto. It’s evident that the industry isn’t showing signs of slowing down despite the emerging circumstances surrounding it. It either these financial institutions embrace it and find a good regulation to let it strive under watchful eyes, or watch it grow without their inclusion.
Lastly, there must be a financial revival among these Central banks to evaluate the benefit of crypto. Failure to do that will weaken the effectiveness of the CBDC even before its invention. Inflation is eating up world economies and Crypto is showing promising signs of being a messiah to battle it. If well regulated, Crypto can aid central banks to fight inflation and project logical solution to economical obstacles.
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