«I hope to see features built into cryptocurrencies that prevent money laundering and terrorism financing,» Sopnendu Mohanty of the Monetary Authority of Singapore says to finews.asia.
Sopnendu Mohanty, is the recent bitcoin hype comparable to the dot-com bubble in the late 90s?
Bitcoin and other cryptocurrencies lost about two-thirds of their value between December 2017 and February 2018. We are still seeing high volatility in their prices, so it is anyone’s guess how the price will continue to move. Investors in cryptocurrencies should be aware that they run the risk of losing all their capital, given the volatility in prices.
The Monetary Authority of Singapore has advised the public to act with extreme caution and understand the significant risks they take on if they choose to invest in cryptocurrencies. MAS has reminded the public that cryptocurrencies are not legal tender.
«We do see some innovative uses of cryptocurrencies which provide clear benefits»
They are not issued by any government and are not backed by any asset or issuer. There is no regulatory safeguard for investments in cryptocurrencies.
Why does the world need cryptocurrencies?
We do see some innovative uses of cryptocurrencies which provide clear benefits. For example, using cryptocurrencies for cross-border remittance, where users buy cryptocurrency in one country and sell it in another. Such remittance, which disintermediates roles which were previously fulfilled by remittance agents, could lower default risks and fees, as there is no need for an intermediary party.
«I hope to see features built into cryptocurrencies that prevent money laundering»
However, there are also illegitimate uses of cryptocurrency, such as it being used for money laundering and illicit transactions. Much like how the internet can be used for both good and bad, we just need to find ways for preventing or minimizing the bad usages of cryptocurrency, while allowing for the good ones to flourish.
What are the characteristics of the cryptocurrency that will survive?
The second generation of cryptocurrencies have done much to improve transaction time, and lower fees. I think what they are lacking is still price stability. No one wants to send $50, not knowing if it will be $40 or $60 when it reaches the recipient. I also hope to see features built into cryptocurrencies that prevent money laundering and terrorism financing.
Do rules for bitcoin and blockchain need be universal?
Rules would eventually need to be harmonized, but interoperability is probably a more important and achievable outcome than being universal.
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