Reserve Bank warns Aussies over punting on ‘fad driven’ cryptocurrencies

The Reserve Bank of Australia (RBA) has warned Aussie investors about speculating on digital assets as it casts doubt over the entire crypto sector.

During a Nov. 18 address to the Australian Corporate Treasury Association, the RBA’s head of payments policy Tony Richards offered an overview on distributed ledger tech, crypto assets, stablecoins, and central bank digital currencies (CBDCs).

In his speech, Richards raised questions over crypto’s validity and growth in 2021 as he took aim at the amount of capital invested into memecoins such as Dogecoin (DOGE) and Shiba Inu (SHIB):

“The recent boom in this area is perhaps best illustrated by the fact that Dogecoin, a cryptocurrency that was started as a joke in late 2013, had an implied market capitalization as high as US$88 billion in June this year.”

“And the Shiba Inu token, which appears to be equally free of any useful function, is currently the ninth-largest cryptocurrency, with a market capitalization of around US$26 billion,” he added.

Richards also asserted that public attention captured by crypto in 2021 was “no doubt fueled by influencers and celebrity tweets,” as he refuted the reported scope of how widespread crypto adoption really is in the country.

“Some surveys have claimed that around 20 percent of the Australian population hold cryptocurrencies, and one claimed that Dogecoin alone was held by 5 percent of Australians. I must say that I find these statistics somewhat implausible,” he said.

Richards outlined three scenarios in which the “current speculative demand could begin to reverse” in crypto that would essentially leave digital assets with minimal use cases in his opinion.

Firstly, he argued that investors may soon “be less influenced by fads” and FOMO and instead pay more attention to warnings of regulators and policymakers.

Secondly, he said that governments across the globe may aim to crack down on energy-intensive proof-of-work-based cryptocurrencies such as Bitcoin (BTC), and finally he said the tax authorities may aim to remove anonymity to clamp down on financial crime.

Related: Aussie crypto companies keen to embrace regulations, says senator

Commenting on Richards’ address, Steve Vallas the CEO of Blockchain Australia refuted the speculative-focused arguments against the entire sector, telling Cointelegraph that:

“Some regulators maintain an unhelpful and narrow focus on the speculative elements of the sector. That lens misses the remarkable infrastructure build that has occurred in recent years.”

— Blockchain Australia (@BlockchainAUS) November 18, 2021

Crypto-friendly Senator Andrew Bragg, who is one of the key politicians behind the push to introduce robust crypto regulations in Australia echoed similar sentiments, noting that “the RBA is short-sighted on cryptocurrency. The utility and value to the economy of the technology is enormous.”