Yang Chin-long, governor of Taiwan’s central bank has said that cryptocurrency transactions lack the trust element found in fiat currencies and the traditional financial system.
Chin-long’s comments came during a conference where he discussed how Taiwan’s reserve bank was planning to adapt to the evolving digital economy. While speaking at the forum, the governor noted that stable and reliable currencies are backed by years or decades of trusted transactions.
Without Trust, A Currency Will Collapse
The governor explained that trust in a currency as a legitimate medium of exchange is of utmost importance, because without it, the currency will likely not retain value and ultimately collapse or become useless.
Going on to criticize cryptocurrencies for their volatility and difficulties with day-to-day use, Chin-long also mentioned that digital currencies could be used to carry out illicit activities due to lack of proper regulation.
Moreover, crypto-assets were meant to be an effective and convenient method of payment, Chin-long pointed out. Instead, the governor noted they were increasingly being used to engage in speculative trading and to promote risky investment schemes.
Cryptocurrencies Are Not “True” Currencies
Notably, in 2013 Taiwan’s central bank had stated that it did not consider cryptocurrencies to be true currencies, therefore, the financial institution did not recognize them as legal tender. They were, however, classified as “virtual merchandise.”
More recently, in May, the Taiwan Crypto Blockchain Self-Regulatory Organization (TBSRO) and the Taiwan Parliamentary Coalition for Blockchain (TPCB) were established. Both these organizations are expected to work cooperatively to develop trust and create industry standards for Taiwan’s crypto market.
Looking at these developments, it appears that the Taiwanese government has invested its resources into examining the potential use cases for cryptocurrencies.
In fact, reports indicate that Taiwan’s reserve bank has been closely monitoring how financial institutions abroad are responding to their respective crypto economies.
In November, it’s expected that Taiwan’s Financial Supervisory Commission (FSC) will introduce a regulatory framework for cryptocurrencies, and at present, the FSC is reportedly working with the country’s Ministry of Interior, the Investigation Bureau, and the reserve bank to draft regulations for cryptos.