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Reserve Bank of Australia warns against vogue frenzy on crypto

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  • Crypto frenzy could dry is regulators and policymakers enters the ecosystem as per RBA
    RBA head of payments policy warns casting doubts over the entire cryptocurrency market
  • Tony Richards raised concerns following funds being invested in meme-based assets
  • 20% of the Aussies hold cryptocurrencies, and DOGE is alone held by 5% of them
  • Richards outlined three scenarios where following such data he believes that the frenzy in the industry could begin to reverse

Crypto market is successful to garner mainstream attention with booming prices. Since the beginning of this year the digital assets have seen notable growth and adoption. Besides we also have witnessed how some of the meme-inspired cryptocurrencies also gained a lot of traction gaining over 799,900%. Indeed, following the scenario, the industry has also attracted financial regulators and central banks. Recently, on Thursday, the Reserve Bank of Australia (RBA) warned its local investors that the speculative crypto bubble could soon burst if policymakers and regulators step-in. Moreover, the bank cautioned the investors over punting in the vogue driven cryptocurrency ecosystem.

RBA casts doubts over the crypto market

On Thursday, while addressing the Australian Corporate Treasury Association, the RBA has warned the Australian residence regarding speculating on crypto assets as it casts doubt over the entire cryptocurrency industry. According to Tony Richards, the head of payments policy at RBA, the frenzy in the digital assets ecosystem could dry soon if policymakers and regulators jump in. Furthermore, Richards offered an overview on distributed ledger tech, digital currency, fiat-pegged stablecoins, and central bank digital currency (CBDC). 

Tony Richards raises concerns on meme-coins 

Following the cryptocurrency’s validity and growth this year, Richards raised concerns. It is worth noting that Richards’ main concerns took aim at the funds being invested into meme-inspired virtual assets like Dogecoin and Shiba Inu. According to the policymaker, the recent boom in the crypto market could be best illustrated by the fact that DOGE, a cryptocurrency that came as a joke, has an implied market cap of more than $30 billion. Additionally he also noted that SHIB tokens that appears to be equally free of any useful function, is currently the eleventh largest cryptocurrency in terms of market capitalization.

Hence, noting the aforementioned data, Richards also asserted that public attention that has been captured by the cryptocurrency market this year was undoubtedly fueled by influencers and celebrities’ words.

RBA gave three demand reversal scenarios

According to Richards, a recent survey has shown that 20% of the Aussies are currently holding at least one type of cryptocurrency. On the other hand, it is also noteworthy that DOGE is alone held by 5% of the Aussies. Hence, RBA finds the statistics as implausible. Hence, Richards outlined three scenarios where following such data he believes that the frenzy in the industry could begin to reverse.

Richards added that investors may soon be less influenced with fads and FOMO. Indeed, the attention would soon shift from celeb wordings to warnings of regulators and policymakers. Furthermore, it is also notable that governments globally are aiming to crack down on energy-intensive Proof-of-Work based digital assets. On the other hand, the last factor that could impact the trend is the aim of tax authorities to remove anonymity and clamp down financial frauds.

RBA’s speculative argument has been criticized

However, the stance of RBA’s payments policy head was criticized. According to Steve Vallas, the CEO of Blockchain Australia, some regulators maintain an unhelpful and narrow focus on the speculative elements of the crypto ecosystem. But such lenses miss the remarkable infrastructure that has been introduced over the recent years.

Simultaneously, Andrew Bragg, a crypto-friendly senator, who is one of the key politicians who is pushing to establish crypto regulation, cited some similar statements. Bragg argued that the RBA is short-sighted on digital assets, as the value and utility of such an ecosystem is enormous for their economy.

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