How are banks & governments responding to crypto?

In the third part of this series of articles from the team at CoinHQ, we look at how banks and governments globally are responding to the cryptocurrency market as it evolves.

Central Bank Digital Currencies (CBDCs)
Globally, central banks are aware of and are responding to the rise in adoption of digital currencies. Not wishing to be left behind, and recognizing the threat to their national currency, many banks are working to introduce CBDCs – Central Bank Digital Currencies. While cryptocurrencies are decentralised, CBDCs have the bank at the centre of all transactions but still make use of the speed and efficiency of blockchain technology for entirely digital transactions.
The benefits are faster global transaction times with lower costs, the ability to move away from cash which is hard to trace and costs money to mint, plus the ability to offer banking services to the ‘unbanked’. More than 1.7 billion adults around the globe do not have access to the services of a bank and CBDCs could give them access to a safe place for their savings and eventually, access to credit.

Bank Issued Stablecoins
In Australia in March 2022, the ANZ Bank became the first Australian bank to mint a digital asset linked to the value of the Australian dollar, it is thought to be the first bank anywhere in the world to create a stablecoin used in a real transaction.

Government Cryptocurrency
Government cryptocurrencies are those officially issued or endorsed by a country as legal tender. In 2018, Venezula became the first nation to issue its own crypto and El Salvador now recognizes Bitcoin alongside the US dollar as an official currency. Meanwhile, China has prohibited private currencies and is developing its own CBDC – the digital e-yuan. India has a similar strategy.

Government Regulation
As cryptocurrencies transform from a speculative investment to a mainstream balanced portfolio option, governments around the world are working to regulate this emerging asset.
In the US, a working group established by US President Joe Biden has launched an Executive Order for the administration to investigate and develop recommendations for regulating crypto, aiming to ensure the responsible development of digital assets within the states. Not wanting to be outdone, the UK has made a similar announcement.

Russia/Ukraine Conflict
The role of cryptocurrencies has been a key talking point during Russia’s invasion of Ukraine and the enacting of sanctions and subsequent financial market turmoil. Discussion surrounds moves by Governments to ring-fence themselves from the effects of sanctions by removing their dependence on national fiat currencies, meanwhile cryptocurrencies have been used extensively to provide support to Ukrainians.

Governments Response Crypto 1 SBA Small Business Accounting 1 e1701290475266

The Future for Mainstream Adoption of Cryptocurrencies and Blockchain Technology

The attention being cast on cryptocurrencies by governments and major banks globally, together with the development going into blockchain and smart contract applications, is accelerating the pace at which the world moves to mainstream adoption. New Zealand has never been slow to adopt new technology and our geographical isolation means Kiwi businesses have plenty to gain from adopting more efficient ways of transacting globally. Additionally, inflationary pressures, in part from the effects of the Covid-19 pandemic, should encourage us all to look for smarter ways to invest our hard-earned capital.

Stay Informed

We highly recommend staying in the loop – follow CoinHQ on our social media channels and sign-up as a Coin Beta Tester to receive monthly newsletters as the platform develops.

Let's catch up!

We’re keen to help, so contact us below & your branch will be in
 touch, or find your local branch to learn more about them first.