Ravi Menon, Managing Director of the Monetary Authority of Singapore (MAS), argued that cryptocurrencies have failed to serve as a medium of exchange and store of value. Therefore, they are being examined as digital currency. In his opening speech at the Singapore Fintech Festival, Menon emphasized that stablecoins and central bank digital currencies (CBDCs) will overshadow cryptocurrencies and become future components of the financial ecosystem.
Cryptocurrencies Show Low Performance in Digital Currency
According to Menon, cryptocurrencies have struggled as digital currency due to their inadequate performance in fundamental functions. Menon cited their inefficiencies as a medium of exchange and store of value, their sensitivity to speculative price fluctuations, and significant losses suffered by many cryptocurrency investors as examples. MAS sees stablecoins with robust infrastructure and regulatory compliance, CBDCs, and tokenized bank obligations as complementary contributions to the digital currency environment.
Despite Singapore’s reputation as a cryptocurrency hub, Menon highlighted that the country prefers to be recognized as a digital asset hub. He highlighted examples of legally sound and infrastructure-backed stablecoins such as StraitsX’s stablecoin and Paxos Digital’s new USD-backed stablecoin. Menon referenced Project Guardian’s efforts to tokenize currencies, bonds, and funds to increase global liquidity and facilitate financial market transactions. He also conveyed the regulator’s commitment to harnessing technology beyond crypto speculation.
What Should be Understood from Menon’s Statements?
Addressing the challenges in existing digital asset networks, Menon also introduced Global Layer One (GL1), an initiative by MAS. Positioned as a global public good, GL1 aims to facilitate cross-border transactions seamlessly. It also aims to enable the trading of tokenized assets in global liquidity pools while adhering to relevant regulatory requirements.
Ravi Menon’s statements underline the changing landscape of digital currency. On the other hand, the statement reflects an approach that favors stablecoins and CBDCs over cryptocurrencies. However, these statements do not negatively impact cryptocurrencies. We are facing a sector that constitutes a global community of investors. Additionally, stablecoins owe their existence more to Bitcoin and altcoins.
