Why Is The Federal Reserve Afraid of Cryptocurrency and Blockchain?
It's not surprising that the powers are a bit jittery around the new digital asset technology. As the benefits of the new technologies become clear and financial inclusion increases, the ship will have sailed for the Federal Reserve to get fully on board with the new frontier of investing and consumerism. "The Federal Reserve is afraid of losing its monopoly over the manufacturing of money. These are decentralized communities that have their own economies denominated in money that is not backed by the full faith of credit of the United States, so they are truly bottoms up network effect economies. They are equalizing in a great sense geopolitically, which is why you see that some of the countries that are on the fringes of our financial system who have loans from the IMF in danger of default, like El Salvador, are increasingly looking at cryptocurrencies as a way around that yolk of dollar colonialism that has been tethering them for decades," said Matthew Sigel, Head of Digital Assets Research at VanEck. "The Fed is in listening mode and hasn't said much, and the rest of us will wait and see what guidance comes out. But the rest of the world isn't waiting on the Fed... the rest of the world is seeing value in the second source of monetary sovereignty that disintermediates the Fed...we'll see how that shakes out," Sigel added. The central bank and government are realizing that digital currency gives them more control over transactions and the use of money, and makes it easier to be able to identify illicit transactions in a much better way. "This is why China is pushing it so aggressively and is truly leading the world in that way... Europe is somewhere behind and the U.S. is somewhat lagging because we are just beginning to talk now about doing it in the future in terms of digital currency," said Tal Elyashiv, founder and managing partner of SPiCE VC, during a roundtable sponsored by VanEck on the evolution of blockchain. Watch the full webinar sponsored by VanEck to hear more insight about the evolution of blockchain and how the foundation of crypto Is changing fintech: