Benoit Coeure, the head of the BIS Innovation Hub, has stated that a worldwide legal framework for cryptocurrencies will be introduced by 2022.
Looking at how quickly crypto is entering the mainstream, Coeure believes it is the right time for thorough regulation. The former member of the European Central Bank’s executive board is quite concerned about the decentralized finance sector’s (DeFi) expansion, which poses a danger to conventional finance (TradFi) and hence can create systemic risks.
According to a famous French economist, various jurisdictions may be on the verge of developing fragmented methods to crypto regulation that will be wasteful on a worldwide basis. He does believe, however, that there is still time to avoid regulatory scenarios and establish a worldwide framework designed to keep new asset classes in mind. Sovereign nations’ ultimate judgments will be a compromise between sovereign strategic interests on the one hand and concerns towards the financial system’s proper functioning.
Consumer protection, according to Coeure, needs to be a key concern for politicians. To reduce the dangers associated with the unstable asset class, he has advocated prohibiting pension fund users from holding cryptocurrencies.
Coeure concluded in March that Bitcoin was a failing currency because of its volatility while also voicing concerns about major internet corporations’ Cryptocurrency aspirations.
He claims that digital currencies from the central bank would operate in the form of “the glue” for the whole financial system in his most recent interview. It’s not so much about the CBDC acting as the sovereign option towards the private money as it is about CBDC serving as the system’s glue.