BIS has warned that the recent bearish trends and even crashes in different cryptocurrencies tell us that the long-warned dangers of the crypto market have started to materialize.
BIS is the global body for all the major central banks, and in their annual report, they have urged all the relevant players to start the development of central bank-backed digital currencies. It seems that the central banks around the world want to build on the success of cryptocurrencies while removing the volatility and instability.
Agustin Carstens (general manager of BIS) pointed toward the crash of luna stablecoins and the TerraUSD as an example of the different structural problems that are present in the crypto market. He also pointed out how Bitcoin has lost 70% of its value in a short span of time!
Agustin also stated that all cryptocurrencies lack government backing, which makes them less credible and less trustworthy as compared to fiat currencies.
And with the recent collapse of TerraUSD, luna and the bearish trend in Bitcoin have provided the need for proof as well. In fact, Mr. Agustin even went as far as to say that these circumstances in the crypto market are comparable to gravity. Just like can not defy gravity, and it is a universal truth, the crashing of crypto markets was something similar as well.
However, we need to also keep in mind Mr. Agustin and his organization may not like the idea of cryptocurrencies. At a very basic level, cryptocurrencies present something that directly challenges the authority of central banks around the world. So it only makes sense for the BIS to issue warnings like this that say that cryptocurrencies are losing their credibility.
BIS has laid out a vision in which the central banks will use the tech behind the cryptocurrencies to create a digital version of fiat currencies.
These central bank-backed digital currencies will include all the features that can benefit the central banks and the government. However, things like decentralization which is for the end consumer, may not be present!