Over the last week, Mark Carney has been notably vocal in his criticism of the crypto market. Now, of course, this man is an authority on finance, but his words should be taken with a pinch of salt. This is because Carney has a vested interest in slamming the crypto-market, a market that offers an unprecedented challenge to an established order that benefits bankers.
In a speech last week, the governor of the BOE chose not to use the term cryptocurrencies to describe altcoins, as he believes they’re not real currencies. Well…
For the remainder of this piece, I’m going to refer to his criticisms as ‘Carneys’ instead because they don’t seem valid when explored further. In fact, they appear to be based more on his opinion/self-interests than any compelling evidence.
‘Unlikely to be the future of money.’
This Carney is perfect to start us off, as it’s an opinion seemingly pulled out of the air. Those who would defend this assertion would probably laugh at anyone claiming that crypto is the future of money, though both assertions require the same leap of faith.
The difference between the two statements is that those who suggest crypto is the future are doing so out of hope and belief that the technology will be used to its fullest potential. I don’t see how Carney can be so confident that he’s correct when history has shown us that the most significant innovations have grand aspirations and small beginnings.
Perhaps Carney has some information we don’t. (He may have consulted his magic 8-ball)
The truth is, cryptocurrency has the potential to revolutionize the way we interact with, and even perceive our money. Whether or not it will realize this potential will only be revealed in time.
‘A better path would be to regulate elements of the crypto-asset ecosystem to combat illicit activities, promote market integrity, and protect the safety and soundness of the financial system.’ – Carney.
As we’re all aware, until the advent of cryptocurrency banks had made it impossible to engage in any illicit activity. (I’ve now got images of the BOE governor fighting crime and cruising around the streets of London in the Bankmobile.)
Of course, this is false, banks have had decades to combat these problems, yet fiat is the currency of choice for your friendly neighborhood criminal, and for funding terrorism, gangsters… You get the picture.
Market integrity, it can be argued would be achieved by widespread adoption. The markets are volatile, but that’s thanks to mass media outlets and financial gatekeepers spreading FUD. As far as soundness of the financial system goes, have we forgotten about the financial crisis caused directly by the banks?
‘The time has come to hold the crypto asset ecosystem to the same standards as the rest of the financial system.’
Roughly translated this means ‘the BOE recognizes the threat cryptocurrencies pose to our way of doing things.’
Yes, regulations are essential moving forward, but holding a completely different system to the same standards only benefits those who rely on the current one. New technology should not be held to the same standards as a currently flawed system. The hope should be that a new system can instead set new and better standards.
‘…bringing crypto assets into the regulatory tent could potentially catalyze innovations to better serve the public.’ – Carney.
This Carney masquerades as a reasonable point.
A better way of serving the public would be providing a peer-to-peer system that is safe to use and addresses other concerns, like crime and stability. This removes banks and other centralized authorities from the equation.
This is not in the best interests of a banker. It would be better for them to at least stifle elements of the technology through regulations, which allow them better control of the crypto market. Anybody who uses online banking knows that it can be a slow and costly process. Crypto is way out in front in this regard, and the banks are looking for a way to compete without having to spend too much money adapting their existing systems.
‘down with the kids.’ – Carney. (Did he really say that?)
A Carney that every high-school student hopes their Dad won’t use in public. Mr. Carney was actually saying that being open-minded about the eventual development of a central bank digital currency shouldn’t be an effort of central bankers to be ‘down with the kids.’ Though, I suspect nobody would ever accuse the BOE of that.
These ‘kids’ are integrating more and more with a digital world. Many are enticed by the possibility of mainstream digital currency. The younger generations certainly seem willing to try most any application that makes their lives easier. To openly reject the potential of digital currency to become the norm, or at least challenge it, Carney may not just be out of touch with this generation, but he could be making a grave error of judgment on the impact they could have on the adoption of the technology.
Michael is an English and Creative writing graduate of Liverpool John Moore’s University, a former editor of several magazines, and a crypto-currency enthusiast. He is mostly interested in crypto-legislation and the potential of decentralized technology to change the world.