Facebook’s Diem and other cryptos under fire from BIS GM

Karthik Subramanian

The General Manager of BIS, Agustin Carstens, has warned that private cryptocurrencies like Facebook Diem and others can concentrate a lot of the market power into the hands of a few private players putting the financial ecosystem at risk.

This has been the general tone used by many large regulators nowadays when dealing with the idea of cryptos and stablecoins over the last couple of months. While they are clear that they cannot stop the growing popularity of cryptos and have come around to the idea that they need to co-exist within the financial ecosystem, the fact that they have no control over the private cryptos has been gone down well with the regulators and rightly so as well. So, they are looking to regulate the private cryptos and trying to ensure that they do not get out of hand.

Facebook has been in the news for the whistleblower allegations and the outage that it suffered for a few hours and it is clear that regulators and authorities feel the need to ensure that Facebook does not become too big to control. Already, its reach extends far beyond the borders of the US and it has been affecting the way the world works and all this must be monitored closely. The increasing power of Facebook has rattled the authorities as they believe that it would acquire even more power and control when it is allowed to issue its crypto token as it can then easily take it to the masses with not much responsibility for its actual usage.

Agustin also pointed out the risk of bringing in a fragmented payment system that the cryptos would foster and that could pose a big threat to the goodwill that traditional payment systems have built up over the years. Once Facebook brings in Diem and makes it a currency that is inter-operable within its network, that would be akin to a separate financial ecosystem by itself which would pose a threat to the real-world ecosystem and increase the complexity of how they inter-operate.

“In this type of scenario, stablecoins could erode a jurisdiction’s monetary sovereignty and its unit of account through ‘Diem-isation’,” said Carstens.

To offset some of these risks, the central banks are in a race to bring out a digital version of their fiat currencies so that they can bring in a sense of competition to the cryptos and push users to opt for the regulated CBDCs when given a choice.

Read this next

Executive Moves

Stash appoints Liza Landsman as CEO to further grow investing app

Stash is an investing and banking app with over 2 million active subscribers. Its subscription plans start at just $3 a month, and offer a range of products including investing, banking, education, and advice.

Institutional FX

Invast Global ramps up its offering with 10 soft commodity CFDs

Sydney-based prime-of-prime provider Invast Global has expanded its offering with the addition of ten soft commodity CFDs, which increases their index and commodity CFD offering to 35 instruments.

Retail FX

FF Simple and Smart Trades says Goodbye to CySEC authorization

The Cyprus Securities and Exchange Commission (CySEC) confirmed that it has wholly withdrawn the Cyprus Investment Firm (CIF) licenses of FF Simple and Smart Trades Investment Services Ltd.

Crypto Insider

Shining the Light in Crypto’s Dark Places

Something changed in regulators’ minds after the November crash of the FTX crypto exchange.

Executive Moves

Financial Commission Adds Sam Low to Dispute Resolution Committee

The Financial Commission (FinaCom PLC), a dispute resolution service that caters to the financial services industry, has appointed Sam Low as the newest member of its Dispute Resolution Committee (DRC).

Digital Assets, Uncategorized

De-facto owner of Bithumb exchange arrested in South Korea

South Korean prosecutors have arrested Kang Jong-Hyun, the anonymous chairman and owner of the country’s largest cryptocurrency exchange, Bithumb, on charges of embezzlement and stock manipulation.

Retail FX

Interactive Brokers volumes snap three-month losing streak

Electronic brokerage firm Interactive Brokers LLC (NASDAQ:IBKR) said its trading volumes rose in January, an indication that investor confidence in the financial markets is rebounding after having been fairly mixed over the past few months.

Digital Assets

VVF invests $5 million in Everscale, a potential Layer 2 solution for Venom blockchain

“For us, this is a strategic investment aimed at the technological development of projects and teams around technologies that we focus on and actively develop. In particular, we are talking about the Venom blockchain project and its ecosystem, which is planned to be launched soon and for which Everscale is a potential Layer 2 solution.”

Institutional FX

FXSpotStream volume ends string of declines on January rebound

Trading volumes on institutional FX platforms surged in January as traders increased their bets on central bankers’ policy with evidence mounting that inflation and economic growth are both losing momentum.

<