Credit Suisse board member and fintech expert Blythe Masters believes that cryptocurrencies have yet to fulfill their promise as a hedge against inflation, underlining issues with supply limits.
«The story was that essentially, this is a new form of money that had advantages over the old forms of money,» explained Blythe Masters at the Credit Suisse Asian Investment Conference 2022 this week, underlining speculation and illicit activities as the top use cases for cryptocurrencies thus far.
«But to be a form of money, it needs to be a store of value, a unit of account and a medium of exchange. And in many respects, none of the broader family of cryptocurrencies have lived up to the promise of demonstrating characteristics that meet all three of those criteria,» said Masters, who is also the founding partner of private equity firm Motive Partners,
Inflation Hedge
One of the major promises of cryptocurrencies like Bitcoin was not only to replace fiat currencies but act as an inflationary hedge in the midst of historically unprecedented debasement of money.
According to Masters, the proof of such effectiveness «remains yet to be seen» and she underlines a key issue, not in the supply limits of an individual token, but the limit across the entire crypto universe.
«Any one individual cryptocurrency may be in finite supply [but] there happens to be infinite available cryptocurrencies readily being invented. And I think that to me raises a fundamental question mark about the long-term inflationary protection provided by cryptocurrencies,» Masters said, highlighting precious metals as a better alternative in this respect.
«I remain, somewhat to this day, skeptical of many of the arguments put forward as to why Bitcoin will ultimately prevail in pushing out fiat currencies and debasing the business case for banking.»
Not For Everyone
While the potential of the blockchain extends beyond cryptocurrencies to various other areas such as payments, proof of provenance or proof of digital identity, Masters notes that the newly afforded efficiency from distributed ledger technology may not necessarily be desired by all, be it retail or institutional users.
«Not everybody needs or wants 't+0’ settlement,» Masters said, highlighting post-trade processes as an example.
«You or I would certainly value the ability to get the proceeds of stock sales instantly in our accounts. But major institutional traders would be horrified at the notion of having to fully cash settle every single leg of transactions.»
Blythe Masters is a financial services and fintech executive and a Founding Partner at the private equity firm, Motive Partners where she is also CEO of Motive Capital Corp, and President of Motive Capital Corp II, the SPACs sponsored by Motive’s funds. She is the former CEO of Digital Asset, the enterprise blockchain fintech responsible for the groundbreaking market infrastructure project of the Australian Securities Exchange (ASX).
Masters worked previously at J.P. Morgan for 27 years. She was a member of the Corporate & Investment Bank Operating Committee and firmwide Executive Committee. Positions included Head of Global Commodities, Head of Corporate & Investment Bank Regulatory Affairs, CFO of the Investment Bank, Head of Global Credit Portfolio and Credit Policy and Strategy and Head of Structured Credit.
Masters is a Board Member of A.P. Møller Maersk, GCM Grosvenor, and Credit Suisse Group where she also serves as Chair of Credit Suisse Holdings (USA), Inc. She is Chair of Wilshire’s Digital Asset Advisory Group, and an Advisory Board member for the US Chamber of Digital Commerce, Figure Technologies (the blockchain fintech), Sandbox (Google X’s enterprise quantum solutions division), and Maxex (the residential mortgage exchange). She is a member of the Brookings Institution Taskforce on Financial Stability and P.R.I.M.E. Finance (the Hague-based Panel of Recognized International Market Experts in Finance).
