In 2022, the Governor of the National Bank of Belgium joyfully declared that their institution celebrated when cryptocurrency prices declined – he even proclaimed that “the start of the crypto winter last year was positive news for us.”
Crypto Winter Has Helped Regulators
Governor Pierre Wunsch of Business AM had a unique perspective on the “implosions” that have occurred in the crypto sector over this past year; he sees them as an advantageous opportunity for regulators responsible for protecting our conventional financial system.
Wunsch expressed his apprehension about the rising prevalence of cryptocurrency investments and their possible effect on economic stability. However, he affirmed that because crashes within this market did not affect financial steadiness, it was a non-issue in hindsight.
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The Crisis in the Crypto Market Did Not Spread to Equity Markets
In its fiscal year 2022 report, the National Bank of Belgium illuminated that “contagion from the crypto market” had not infiltrated “equity markets.” As there are few links between regulated financial institutions and cryptocurrencies, this market instability has yet to have a major impact on established monetary systems. This crypto winter of 2022 has ceased any further growth in the cryptocurrency sphere for now – something which traditional banking services were keen to avoid, as Business AM reports.
Wunsch felt that the crypto shares displayed “striking resemblances with financial bubbles of times gone by,” and he characterized its valuation and makeup as “highly speculative.”
The publication further alluded to the potentially nefarious activities of the FTX Crypto exchange, insinuating it indirectly.
Central Banks Issuing CBDCs See Cryptocurrencies as Competitors
Recently, Business AM declared that central banks are not impartial bystanders regarding cryptocurrencies since they have their own digital currencies – Central Bank Digital Currencies (CBDCs). The cost of Bitcoin plummeted from its all-time high of nearly $48,000 to below $16,000 in the last crypto winter. Subsequently, last year the government passed a bill that demands exchanges and wallet providers register with the Financial Services and Markets Authority (FSMA) regulator.
