Financial technology has often been visualized as a threat that makes traditional banks redundant. Fintech innovations – like the blockchain – bring effectivity to many processes. Yet, there are relevant questions to be asked: Who exactly launches modern cryptoassets and why? Who benefits from this change? Dig deeper into the virtual money pond and read more about how you can keep up with this emerging trend.
Cryptoassets are defined as digital units of a certain account, often on a blockchain. In practice, cryptoassets vary from reward points to assets such as virtual coins. Before cryptoassets can be used in traditional business, a great deal of new regulation is required. Even the more established of cryptoassets are extremely volatile.
The KPMG FS Head in EMEA (Europe, Middle East and Africa), Francisco Uría, has worked for both the Spanish government and the banking sector. He points out that there are many unsolved questions around cryptoassets.
“It is important that the whole financial sector engages in a public conversation around the principles and the rulesregarding cryptoassets”, states Uria.
Uria emphasizes that all influencers in today’s economy should be aware. He then challenges us. “Who can launch a crypto currency? It is a very philosophical question,” he remarks.
In the analog world a similar question would be who is legally able to print money. It is important to understand that when a new currency is launched, it changes the fundamental structures of the reliable global economy we have built up to this day. It might be a change towards a civil society, but we must pay attention to the influencers behind these assets – also from a political and legal standing point.
It is important that the whole financial sector engages in a public conversation around the principles regarding cryptoassets.
As new technologies and platforms develop, information has become global and it has no physical borders. That is why today children are taught to be critical: to check where they read their news from, who is the publisher and how that might affect the context. Will the challenge of tomorrow be financial background and fact checking? Most likely money becomes even more digital than it already is today, but we also need to ask ourselves, do we really need more currencies or just a new system?
The bravest participants of this modern age gold rush have made significant earnings. Bitcoin for example has increased exponentially in value since its creation in 2009. High risks have yielded high rewards to some investors.
Institutionalized companies and corporations are very careful in using cryptoassets due to their volatility. It is not possible to function with solely cryptoassets, as the currency vary up to 30 percent – or even more – from a day to another. Bills and salaries need to be paid in a timely manner, therefore crytoassets are not yet a reliable option.
There is determination and willingness to create stable cryptoassets, i.e. stablecoins. “It is possible that there will be an institutionalized and stable crypto currency in the future, but we are not there. Nevertheless, lawmakers, regulators and central bankers are dedicating a lot of time to think about it,” Uria notes. Uria agrees that the development of new financial technology can create efficiency and effectivity in the global market. He reminds that many of the open questions we have not been addressed yet.
“It would require robust investments to challenge the banking system and to reach a significant position in the global economy,” he estimates. To realize the change in a controlled way he sees that the traditional banking system could work together with the vast cryptoasset world. As an example, Uria points out that the cooperation between fintech startups and established institutions has also before been fruitful.
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