- According to RBA, the amount invested in crypto, specifically the leading meme coins like Dogecoin and Shiba Inu is questionable.
- The RBA’s head of payment policy mentioned that the speculative demand of the crypto market is bound to be reversed as he highlighted three factors that could reduce their use cases.
The crypto market has beyond doubt benefitted hugely from the growing global demand. This year has seen the likes of Bitcoin hitting a trillion market cap, and Meme coins like Dogecoin and Shiba Inu reaching their all-time highs. The rising demand for crypto has forced the Reserve Bank of Australia to issue a sound of warning to Aussies as it casts doubt on the entire crypto sector.
When addressing the Australian Corporate Treasury Association, Tony Richards, the RBA’s head of payment policy gave briefings on crypto assets, stablecoins, Central Bank Digital Currencies (CBDCs), and Distributed Ledger Tech.
According to Richards, the amount invested in crypto, specifically the leading meme coins like Dogecoin and Shiba Inu is questionable and dangerous to investors as they have no clear useful functions.
The recent boom in this area is perhaps best illustrated by the fact that Dogecoin, a cryptocurrency that was started as a joke in late 2013, had an implied market capitalization as high as US$88 billion in June this year. And the Shiba Inu token, which appears to be equally free of any useful function, is currently the ninth-largest cryptocurrency, with a market capitalization of around US$26 billion.
Richard Tony’s three factors that could collapse the crypto market
A recent survey by Finder Consumer Sentiment Tracker disclosed that 17 percent of Australians hold crypto with their total holdings adding up to $8 billion. Richards, however, finds these figures deceptive. According to him, this “so-called” growing crypto adoption is motivated by influencers and celebrity tweets.
Some surveys have claimed that around 20 percent of the Australian population hold cryptocurrencies, and one claimed that Dogecoin alone was held by 5 percent of Australians. I must say that I find these statistics somewhat implausible.
Richards further mentioned that the speculative demand of the crypto market is bound to be reversed as he highlighted three factors that could reduce their use cases.
According to him, investors will soon pay more attention to policymakers and regulations rather than Fear, Uncertainty, and Doubt (FUD), and Fear of Missing Out (FOMO). Also, he believes that governments across the globe will soon crack down on energy-intensive cryptos like Bitcoin coupled with the possible policies against anonymity by tax authorities to fight against tax crime. He believes that these would cause a massive pullback of the market.
His position has been opposed by several industry key players including Senator Andrew Bragg, the main figure behind the push for crypto regulation in Australia. According to him, the RBA is short-sighted on crypto as they are ignorant of the utility and the value of the technology to the economy.
Steve Vallas, CEO of Blockchain Australia also opposed the speculative focus argument of Richards.
Some regulators maintain an unhelpful and narrow focus on the speculative elements of the sector. That lens misses the remarkable infrastructure build that has occurred in recent years.