Cryptocurrencies are now ‘mainstream'. The United States' hearings into Facebook's plans to launch a new cryptocurrency called Libra prove that very fact, according to the CEO and founder of financial advisory organisation, deVere Group.
Nigel Green says that the high-profile scrutiny of Facebook's new cryptocurrency is a milestone because it shows that cryptocurrencies are already part of the global financial system.
“They are here to stay. And their influence is set to grow exponentially. As such, they should face the same scrutiny and meet the same standards and requirements as the rest of the financial system,” he says.
“This is a step in the right direction for establishing a robust global regulatory framework for the wider crypto market.
But cryptocurrencies need regulation. That regulation must provide protection for the growing number of people who use cryptocurrencies, and it must discourage cybercriminals from using these types of payment methods.
Green says that the more protection there is, the less potential risk there will be for disruption of global financial stability. There will also be more opportunities for higher economic growth for countries that introduce cryptocurrency regulation.
“Whatever you think about Facebook's Libra as an individual cryptocurrency, these top-level U.S. governmental hearings underscore again that, as a concept, digital, global, borderless currencies are now a part of mainstream finance, and increasingly so.
“This is why most major financial institutions, tech giants, and of course institutional and retail investors are increasingly involving themselves in the burgeoning sector.
Green notes that President Trump mentioned Bitcoin in a move to make cryptocurrencies a political issue.
"I agree with Mr Trump that Facebook's new Libra project should be scrutinised,” says Green. "This all adds to greater awareness and acknowledgement of digital currencies that will further boost mass adoption and push up prices across the sector."
“But, being the social media monolith that it is, it is surely expecting this level of scrutiny. I would suggest that it is prepared for it, has the resources for it, and will welcome it, as it will make its cryptocurrency stronger.
He adds that, “Facebook's Libra will likely get through these hearings on Capitol Hill in a stronger position. The scrutiny, which could advance the cause of regulation, will be welcomed by crypto investors as it provides more confidence.
“But whatever happens with the social media giant's crypto project, it is clear from the top-level hearings that the U.S. government now understands that, whether they like it or not, people and institutions across the world are increasingly using a combination of sovereign and non-sovereign digital currencies.