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- Felipe Medalla, the future Central Bank of Philippines Head, is not very keen on crypto assets and thinks that the sector is based on greater fool theory.
- He told a news website that people make investments in these assets as they think that others will acquire it at a higher value.
- As of now, the cryptocurrency market has already shed over a Trillion Dollars during the last few months, and has the market cap of $907 Million at the time of publishing.
Future Philippines Central Bank Chief On Crypto Assets
Filipe Medalla, the soon to be head of Philippines Central Bank is not a very big fan of cryptocurrency, and doesn’t desire to regulate them, concluding that digital assets are based on “greater fool theory.”
He stated to a news website that every crypto holder he knows does not utilize the crypto asset for any purpose. Folks are only getting their hands over it because they believe somebody will purchase it at a higher value from them. This is some spooky investment.
Filipe Medalla is a Monetary Board’s member at present.
Bill Gates also used the greater fool theory to give his criticism regarding crypto assets.
The soon to be Central Bank head thinks that cryptocurrency can only benefit the folks who desire to hide their money from the authorities.
The Philippines Central Bank does not have its command over crypto assets but it has offered guidelines for VASPs (Virtual Asset Service Providers).
His perspective is that as soon as folks cross from the digital world to the tangible and fiat world, they are required to go through KYC policies. Same applies to AML policy.
What Does This Greater Fool Theory Mean?
Many of you must be acquainted with the meaning of market bubble, especially the investors. The past couple of decades have witnessed considerable market bubbles: the tech stock bubble in the 2000s and the real estate bubble back in 1990s.
To keep it short and simple, a market bubble is a scenario in the market where the value of specific assets escalates higher than what we call the fundamental value of the asset.
Usually, bubbles are associated with the outbursts of irrationality creating the misallocation of investments due to their self sustaining and self generating nature.
Greater Fool Theory is connected to the same idea. As per this theory, folks think that they can make fortune during the market bubble by taking over the overvalued assets and selling them later for higher profit margins.
Anurag is working as a fundamental writer for The Coin Republic since 2021. He likes to exercise his curious muscles and research deep into a topic. Though he covers various aspects of the crypto industry, he is quite passionate about the Web3, NFTs, Gaming, and Metaverse, and envisions them as the future of the (digital) economy. A reader & writer at heart, he calls himself an “average guitar player” and a fun footballer.
