Federal Reserve Bank of Boston Vice President Jim Cunha discussed his views on cryptocurrency adoption and limitations at Forbes’ Annual 30 under 30 Summit on Oct. 2, highlighting asset security remains a significant concern for institutions.
Asset Security a Concern for Banks
While crypto-enthusiasts await widespread adoption, industry observers shed light on the blockchain industry at the ’30 Under 30′ event, discussing the technology’s impact on the perception and production of money.
Cunha spoke at length about the issues voiced by central banks when it comes to embracing cryptocurrencies within their existing framework. He also explained how the U.S. bank interacts with global currency issuers and startups to carefully understand the disruptive technology.
The Federal Bank VP is no stranger to blockchain technology. The Boston bank boasts of a 200-member strong team dedicated to exploring decentralized applications (dApps) on Ethereum and IBM’s Hyperledger Fabric.
For Cunha, central banks are not opposed to the borderless, transparent, and immutable features that blockchain-powered systems offer. Instead; banks are uncertain about the organizations propelling the blockchain industry forward, in particular, the security features they instill in place before being trusted with millions in crypto-assets.
Cunha’s mistrust presumably stems from the pseudonymous veil worn by most developers from serious projects like Monero and Ethereum. In comparison, a majority of ICO projects–which have approachable developers and members–border on the dishonest side of the cryptocurrency sector with tall promises and lack of technology use cases.
Interestingly, Cunha revealed his distrust for third-party startups was limited to the cryptocurrency industry, stating:
“We use private companies all the time. I don’t know if we’ll ever do that with cryptocurrency.”
Panelists Call for Inclusive Financial System
Despite the lack of cohesion amongst blockchain projects and governments, Cunha cited the Monetary Authority of Singapore’s Project Ubin as an example of how central banks realize the potential threat from cryptocurrencies.
The banking veteran added that multiple central banks across the world, such as Sweden’s Riksbank, provide insight on a futuristic, state-controlled cryptocurrency powered by a public blockchain. He added that the adoption could take five years before third-part cryptocurrency companies work directly with central banks.
For most, a state-backed digital token would circumvent the ethos of cryptocurrencies and unnecessarily try to infiltrate a banking system that works well for the most part. However, another speaker at the event, Jeremy Allaire, the founder of crypto-finance giant Circle, believes a new market could form after fiat-to-crypto businesses take off.
Referencing the launch of Circle’s aptly-called stablecoin “USD Coin,” Allaire argues a price-stable currency could kickstart trading between global markets for cryptocurrencies and other isolated asset classes, apart from enabling off-hours trading.
Other panelists expressed the monumental rise of cryptocurrencies in December 2017, and a “proliferation of poorly vetted” projects in the crypto-space has led to widespread skepticism amongst most finance veterans.
But to counter such concerns, younger panelists argued the widespread distrust seen in traditional markets, especially by millennials. With this in mind, blockchain technology could help to regain trust in financial markets by propelling new technologies or building a comprehensive financial system from the ground up.
However, all panelists agreed that fairness, social access, equality, and ease-of-moving money were significant factors influencing the advent of cryptocurrencies. CoinShares chief strategy officer Meltem Demirors concluded:
“We now have to work together to define the future of who has the right to print money and who has the right to define for us individually and collectively what has value.”
Cover Photo by Lance Anderson on Unsplash