Blockchain and cryptocurrencies have shown remarkable progress since 2009, helping to shape the world by enabling access to previously inaccessible financial services and unlocking new vehicles of wealth creation.
Report shows that payment systems built on distributed ledger technology can foster more financial inclusion than any other payment system ever built.
But last year’s market crisis in crypto saw the loss of trillions of dollars of investors’ funds. While DLTs have the potential to build innovative financial systems, lack of regulation in the crypto industry calls for concern.
Until roles, rules, and regulations are defined in the crypto space, exchanges like Nasdaq may not enter the market, Adena Friedman, Chair and Chief Executive Officer, Nasdaq Inc., said at the World Economic Forum, Davos 2023. Apart from NASDAQ, several financial institutions have avoided the crypto market due to its lack of clear rules.
Supporting the CEO of NASDAQ, François Villeroy de Galhau, Governor of the Central Bank of France added that while the discussion about crypto a year ago was between having regulation and not having regulation, it is a matter of regulation and prohibition.
Citing the crypto prohibition stand of India who heads the G20, the governor said that the most important element crypto needs is a quick and international standard regulation.
Blockchain is good
Speaking about the differentiation between crypto and the importance of the underlying technology, Roelof Botha, Managing Partner at Sequoia Capital Operations LLC, stated that bitcoin still receives the most attention in the crypto space because of the backings, which has made it the “digital gold”.
On the other hand, it doesn’t mean that other crypto-related assets are useless. Projects such as Filecoin, which serves as a cheaper storage system compared to Amazon have demonstrated this.
He also mentioned that blockchain projects have shown a strong usage for payment solutions, such as Bitcoin and lightning for cheap cross-border transactions; and email and messaging systems such as Signal.
Blockchain can help build a system that can provide banking instruments for the over 1 billion people that own smartphones in the world but are unbanked.
In addition to Roelof’s observations, Michael Miebach, Chief Executive Officer of Mastercard, said that the promise of crypto lies in its foundation – blockchain technology. Scaling payment will require interoperability, consistency, inclusion, and if done well, it will increase the adoption of crypto.