Troubled or Intrigued? Central Banks’ Latest Stances on BTC and Crypto Assets

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Catalyzed by increased familiarity with BTC and recognition of blockchain technology, public interest has seen a shift away from traditional assets to cryptocurrencies. Once associated with maverick investors, BTC is moving higher up the pecking order of commercial banks, institutional investors, and interestingly, monetary authorities. As central banks continue to weather through economic headwinds caused by the COVID-19 pandemic, their take on Bitcoin and crypto assets has also changed, though opinions remain divided across borders.   

Some central banks warm toward crypto assets and the underlying blockchain technology, while keeping a formal regulatory approach.

The Monetary Authority of Singapore offered regulatory support to drive a more robust crypto-asset economy

The Association of Cryptocurrency Enterprises and Startups Singapore (ACCESS), a group of over 400 crypto and blockchain-related businesses, recently released the Code of Practice guided by the Monetary Authority of Singapore (MAS). Per the release, MAS facilitated the initiative, which aims to standardize the approach to Know Your Customer (KYC) best practices and other issues relevant to crypto-asset businesses. Sopnendu Mohanty, chief fintech officer of MAS, said this rollout will help cement regulatory compliance, while allowing licensed industry players and innovation to flourish.

The Central Bank of Ireland pushed for regulatory clarity that may enable Irish crypto businesses to scale

In a formal letter to the European Commission, the Central Bank of Ireland made comments in support of developing a harmonized approach to crypto assets and an EU-regulated market for cryptocurrencies. While a unified regulatory framework may still be years away, a step forward in this direction could help Irish crypto exchanges gradually steer away from operating in the grey area and move to a stronger position closely monitored by the EU. Previously, the Central Bank of Ireland had released two warnings, both of which depicted BTC as a form of unregulated digital money that is not guaranteed under Irish law and has no legal tender status.

The Reserve Bank of India confirmed no banking ban on the crypto industry 

In response to a Right to Information (RTI) request, the Reserve Bank of India (RBI) has confirmed that there is no longer any banking ban on crypto exchanges, companies, or traders. Back in 2018, the RBI issued a circular to prohibit banks from offering services to any entity dealing with cryptocurrencies. The ban, which lasted about two years, was quashed by the Supreme Court of India in March this year. Following the court ruling, crypto exchanges in India saw a rapid increase in trading volumes and new users during the extended national lockdown. The RBI also previously confirmed that BTC and other cryptocurrencies are “legal in India”. 

The number of approved crypto exchanges is on the rise in the Philippines

The Philippines’ central bank, Bangko Sentral ng Pilipinas (BSP), has so far approved 16 cryptocurrency exchanges. Finchain Technology Inc., Iremit Inc., Moneybees Forex Corp., and Wibs PHP Inc. joined the 12 crypto exchanges previously registered by the central bank, while many others are reportedly in the process of applying. The Philippines has continued to grow more crypto-friendly since 2017, when the central bank started to register companies looking to provide services using cryptocurrencies. Meanwhile, the Philippine Securities and Exchange Commission is readying crypto guidelines, which include those for initial coin offerings (ICOs) and virtual currency exchanges.

On the other end of the spectrum, however, some central banks have suppressed appetite for BTC and crypto assets.

Deputy director general of the Banque de France called BTC a myth and a pseudo-currency 

In a paper released by the Banque de France, Deputy Director General Christian Pfister claimed that BTC and other first-generation crypto assets are part of a myth. Per his argument, BTC is primarily used to make speculative investments and fails to wholly meet the criteria currently fulfilled by fiat. Additionally, while the Banque de France is on the verge of testing its central bank digital currency with eight financial and tech partners, crypto assets are excluded from the experiments. 

First deputy governor at the Bank of Russia compared cryptocurrency with financial pyramid schemes and roulette games

Sergei Shvetsov, the first deputy governor at the Bank of Russia, voiced the bank’s negative stance toward crypto investment during a recent live session. Shvetsov emphasized that the central bank absolutely does not recognize any crypto purchase as an investment, and cryptocurrencies like BTC are subject to criminal liability. The bank’s latest remarks came shortly after Russia passed its first major crypto bill, which legalizes crypto trading but prohibits the use of cryptocurrencies as a payment method. 

BTC has been on a wild ride since its inception, and the journey through policy circles has not been easy. But as market regulation slowly comes into force and BTC continues to mature, crypto assets once again shape the dialogue among monetary authorities.