CRYPTOCURRENCY
Are cryptos a bubble or the future of finance? The Middle East region has a keen eye for financial technology and the initiatives that are being implemented from Tel Aviv to Dubai underscores how digital assets are making inroads into the region
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ryptocurrencies, once a potential rival of gold as a safe-haven store of value, they have lost their lustre among institutional investors after a volatile plunge from record-highs following a crackdown on mining and trading activities. Considering the growing interest in cryptos from some of the world’s leading financial institutions and individuals alike, regulators including some from the Middle East region have called for cryptos to carry the toughest bank capital rules of any asset. Deloitte said, “An increasing number of companies worldwide are using Bitcoin and other crypto and digital assets for a host of investment, operational, and transactional purposes.” Regulators and investment experts often dismissed cryptocurrencies as
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REGULATION IS A STUMBLING BLOCK, BUT REGULATORS HAVE SHOWN THAT THEY SEE THE VALUE OF BLOCKCHAIN AND CRYPTOCURRENCIES, AND ARE WORKING TO SUPPORT THESE TECHNOLOGIES, WHICH BODES WELL FOR FUTURE ADOPTION – Accenture
Banking and Finance news in the MEA market
excessively volatile, a bubble, too risky to invest in. However, those in favor of cryptocurrencies especially financial technology experts argue that they are a hedge against inflation and fiat currency fluctuations. Those arguing in favor of cryptos also say that they can survive any economic or infrastructure collapse, a belief that is being widely shared following the global economic fallout due to the pandemic. “Regulation is a stumbling block, but regulators have shown that they see the value of blockchain and cryptocurrencies, and are working to support these technologies, which bodes well for future adoption,” said Accenture. However, not all think the same way. The Basel Committee on Banking Supervision, a global committee of banking super visor y authorities, cautioned earlier in June that the growing use of cryptocurrencies has the potential to “increase global financial stability concerns and risks to the banking system in the absence of a specified prudential treatment.” Cryptocurrency users leverage blockchain technology, a decentralized ledger system of all transactions across a peer-to-peer network that enables par ticipants to confirm transactions without a need for a central clearing authority.
