Central Banks Think THIS About CRYPTO!! Report You CAN’T Miss!!

Crypto adoption is increasing and it's Safe to say that the central banks don't Like that fact Recently the so-called bank for central Banks published a report claiming that Crypto adoption causes Financial Instability in developing countries Which is of course where adoption is Happening the most The report included input from the Central banks of the United States Mexico Brazil and a few other major Latin American countries Their concerns about crypto adoption Paint a surprisingly bullish picture That's why today we're going to Summarize this report explain the Significance of what's being said and Tell you what it could mean for the Crypto Market this is one you do not Want to miss The report we'll be summarizing today is Titled quote Financial stability risks From crypto Assets in emerging market Economies it was published by the bank For international settlements or bis Late last month Note that the bis has the moniker of the Bank for central banks as I mentioned a Few moments ago now the report begins With a forward which basically says Everything I said in the introduction it Analyzes the adoption of crypto in Developing countries includes

Recommendations on how to keep crypto Under control and was written by the Aforementioned central banks the U.S Mexico Brazil and others the only thing That really caught my eye was that it Seemed to claim that crypto adoption in Developing countries is high because These countries generally have low Financial literacy This is in stark contrast to a recent Study by a U.S University which found That crypto adoption actually increases Financial literacy this makes sense Considering that you kind of must Understand crypto before you truly adopt It anyways the more you know now the First section of the report provides a Short summary of the key findings a few Things caught my eye here for starters The authors seem to be hyper focused on The rise and fall of the crypto Market They don't seem to care about why people Are adopting crypto but simultaneously Acknowledge the reasons why for example Quote proponents of crypto assets claim That they offer lower transaction costs Faster payments no intermediation Anonymity and potentially High Returns On investment whether they deliver on These claims is another matter now that Second part is surprising they refuse to Argue against it moreover quote for some Users crypto assets provide an Alternative to limited Investments and

Savings instruments while for others They offer a seemingly Safe Haven Against volatile domestic currencies now This conflicts with what the authors Implied in the forward they know those Adopting crypto are informed in other Words they know exactly why people in Developing countries are adopting crypto Because their Fiat currencies suck Instead of addressing these shortcomings The authors essentially conclude that Something must be done to keep crypto Under control because of supposed Financial stability risks The authors then highlight a number of Risks in particular Market risks due to Volatility liquidity risks due to a lack Of transparency credit risk due to a Lack of governance AKA control Operational risk due to cyber attacks Currency substitution risks and capital Flow risks due to crypto's use in Cross-border payments the irony is that Many assets are more volatile than Crypto the existing Financial system is Even less transparent than the crypto Industry tradfi has exponentially more Credit risk than defy and cryptos are More resilient to cyber attacks because They're more exposed they are being Tested literally every day This just underscores the fact that the Only risks the authors are actually Concerned about are currency

Substitution and capital flows to Address these risks quote authorities Can consider selective bans containment And regulation a classic starting point For these bis reports note that you can Find our summary of another crazy bis Report using the link in the description Now the actual report begins with an Introduction wherein the authors explain What cryptos are and how they work they Then divide crypto into two categories For the purpose of their analysis Stablecoins and unbacked crypto assets Which means everything else Bitcoin Ethereum etc etc For context central banks hate stable Coins probably because they're direct Competitors to Central Bank digital Currencies or cbdcs what's interesting Is that governments seem to like stable Coins because they're backed by Government debt this means they can use Stable coins to subsidize their spending Anyhow the authors go on to explain that This report Builds on recent work by the Financial stability board or FSB a sort Of subsidiary of the bis if you've Watched any of our videos about the FSB You'll know that it's crypto Recommendations become regulations in Its member countries namely the G20 The work that bis is building on is a Crypto framework put together by the FSB Which can be seen in this image here now

This image is ironic because it notes That stability risks only flow from Crypto to tradify as we've seen with the Banking crisis the stability risks seem To be coming from tradify not crypto Before breaking down the risks crypto Allegedly poses two Trad five the Authors make another eye-opening claim Quote the crypto Universe was built on The promise of an efficient Decentralized low-cost inclusive safe And open monetary system but structural Vulnerabilities in the design and Operation of crypto asset markets make Them unsuitable as the basis for a Mandatory system now the key word here Is monetary the central banks oversee The monetary side of the financial System in Practical terms this means Raising or lowering interest rates Through various mechanisms to affect the Amount of currency in circulation It's clear that they do not want to lose Control of this ability Now you'll recall that the first crypto Risk is Market risk a few things worth Noting here first the authors seem to Imply that publicly traded crypto Companies are inherently risky they also Take issue with the fact that some Cryptos are held mostly by a handful of Wallets They provide some fascinating statistics To back up their claims quote in 2020 an

Estimated 10 000 individuals owned about A quarter of all outstanding Bitcoin Satoshi Nakamoto the anonymous creator Of Bitcoin is the largest holder with More than one million stored in Different wallets around five percent of The total other tokens show similar Concentration for example fewer than 100 Participants control over 51 of the Value in Dogecoin zcash and ethereum Classic So at first glance these statistics are Concerning but it's easy to forget that There's even more extreme wealth Concentration in other asset classes Case in point the top one percent Reportedly earned more than the rest of The world combined over the last two Years why isn't the bis raising this Point Now the second thing worth noting is That most of the author's concerns Around Market stability appear to be Directed to stable coins which should Come as no surprise given what I Mentioned earlier about them being Competitors to cbdcs What is surprising is that the authors Also Target spot Bitcoin ETFs quote Bitcoin ETFs could potentially pose Market risk in EMES by lowering the Barriers to entry for Less sophisticated Investors and increasing investors Direct and indirect exposure to crypto

Assets oddly enough the authors are Concerned about the wealth concentration Bitcoin ETFs could cause here are a few More statistics quote as of end March 2023 ETFs owned a combined 819 125 BTC 3.9 of the total Bitcoins to be Issued 21 million The largest Bitcoin ETF is grayscale Bitcoin trust gbtc which earns 643 572 BTC or nearly three percent of the Total Supply in total ETFs governments And public and private companies own More than 1.6 million BTC approximately 7.8 percent of the total Supply on that Note you should check out our recent Video about the US government selling Its BTC Holdings that will be down in The description now the second crypto Risk is liquidity risk the authors start By noting that most of crypto's trading Volume takes place on offshore exchanges Such as binance What's odd is that they include Hobie as One of the top crypto exchanges and as a Potential point of concern when it's no Longer that large hmm Odyssey's aside the authors also take Aim at tether and allege that its usdt Stablecoin is still insufficiently Backed it seems they missed the memo That usdt is now backed almost entirely By U.S government debt like all the Other major stable coins seems that the

Bis is making arguments using outdated Data anywho there's something else that The authors point out which is actually Quite important and it's that money Market funds were a major source of Market instability in 2008 and in 2020. For those unfamiliar money market funds Are kind of like tradify stable coins The difference being that you earn a Yield on them naturally the authors note That stable coins are similar and that If they were to experience a run this Could create problems for the assets That back these stable coins namely Government debt The thing is that most money market Funds are significantly bigger than most Stable coins and therefore riskier in Any case the third crypto risk is credit Risk the authors Define credit risk in The context of crypto as quote the Potential that a counterparty in crypto Asset markets or directly exposed to Crypto assets could fail to meet its Obligations in accordance with agreed Terms areas of concern include Interconnectedness between crypto Companies citing FTX and Alameda lack of Governance and disclosures citing Dows Leverage citing defy and even crypto Exchanges having access to bank accounts Citing Chilean authorities who forced Banks to bank crypto exchanges speaking Of which crypto companies and projects

In pro-crypto jurisdictions are still Having a hard time opening bank accounts Despite favorable crypto regulations This is likely due to the financial Action task force or fat F but it seems That this pressure could be coming from The central banks at least in part Regardless the fourth crypto risk is Operational risk the authors take issue With the fact that cryptos use Blockchains because quote one of the key Features of blockchain technology is its Irreversibility once a transaction is Recorded on the blockchain it cannot be Undone This feature can be problematic in Situations where transactions need to be Reversed such as in the case of a hack Or fraud Newsflash but if crypto transactions Could be reversed then there would be no Point to having crypto because it could Be manipulated by governments central Banks and Wall Street just like they do With money and other Assets in case it Wasn't clear enough they want to be able To do this with crypto too now the fifth Crypto risk is Bank disintermediation Risk this includes both currency Substitution and Reserve currency Substitution which you'll remember are Very big concerns for the central banks Lo and behold the authors admit that Crypto could quote reduce the monetary

Authority's control over liquidity in The economy thus weakening the Effectiveness of monetary policy The authors reiterate the reasons why People would opt to substitute their Fiat currencies with crypto you'll Remember these reasons included not Trusting the fiat currency crypto being More efficient than Fiat and crypto Being more private than Fiat which Actually isn't accurate at least in the Case of cash The reserve currency substitution Section is where things get seriously Bullish for crypto listen to this quote If crypto assets become mainstream they Could also replace the global Reserve Currency as a perceived store of value The report denotes this substitution Process as cryptoization 2.0 put simply The authors are speculating about the Possibility that crypto could compete With Reserve currencies like the US Dollar if they see enough adoption the Caveat is that they're saying this in The context of developing countries Where they think crypto will be used to Evade Capital controls even so this Pertains to something we speculated About in our recent video about the Brics countries and that's that they Could adopt a crypto as their common Currency the fact that bricks's current And future members fit the profile of

The countries described in this bis Report underscores this possibility now The final crypto risk is capital flow Risk which you'll remember is another Big concern for the central banks that's Because crypto makes it possible for People to move their money around Without asking for permission from Big Brother that's not allowed in the modern Financial system the authors of the Report are frustrated about the fact That quote crypto assets can be traded And stored on a Global Network of Computers often offshore servers and Digital wallets making it possible for Them to operate beyond the jurisdiction Of any one country They're also upset about the fact that Quote a person can create a digital Wallet on a computer or mobile device And store crypto Assets in it without Having to go through any formal Registration process or identity Verification note that they want to Connect all crypto wallets to digital IDs eventually to drive the point home About crypto Capital flows being a risk The authors provide another statistic Quote one of the biggest Mexican crypto Exchanges claimed that in the first half Of 2022 it processed remittances for one Billion dollars in crypto assets Approximately 3.6 percent of the total Flow in that period

Bullish now this begs the question of How these crypto risks could spill over Into the traditional Financial system The third part of the report has all the Answers from the perspective of the bis Are essentially summarized in a single Infographic that shows the connections Between crypto and tradfi now we don't Have time to go through all the Connections here but you probably know Most of them already crypto to Fiat on And off ramps stablecoins being backed By government debt etc etc What's crazy is that the authors suggest That even if crypto risks don't spill Over into tradify directly they could Spill over indirectly quote disruptions In the crypto asset Market can Potentially spill over to other Financial markets through confidence Effects for example a sharp drop in the Value of crypto assets could erode Investor risk appetite this could lead To outflows from the traditional Financial system and tighten Financial Conditions put differently if the crypto Markets crash this could spook investors In tradvi and that would cause issues Therefore crypto must be regulated Contained banned Etc Madness it also Makes no sense because the opposite is True stocks influence cryptos price Action not the other way around All of these allegations about crypto

Risks were probably intended to Prime The reader for the fourth section which Is crypto adoption in developing Countries after all if crypto is so Risky and bad then we need to make sure Those unfortunate folks in the global South are extra protected in all Seriousness the author's detail for So-called risk catalysts for developing Countries when it comes to crypto the First is crypto adoption the second is Inflation and the lack of Central Bank Credibility the third is a lack of Payment infrastructure and financial Literacy which isn't true and a lack of Crypto regulation or rather the lack of Anti-crypto Regulation That central Banks want to see Following a lengthy overview of all the Crypto regulations in select North and South American countries the authors Provide recommendations about how to Control crypto in the fifth part of the Report they start by saying that there Are three approaches to controlling Crypto bans containment and regulation They say that many authorities have Argued that crypto should not be Regulated because regulations would give The industry a seal of approval that Could lead to more adoption this is more Accurate than you think regulations Means institutions and institutions Means lobbying for better regulations

Believe it or not but the authors Actually aren't in favor of a crypto ban That's because it would mean absolutely No oversight of crypto they're also not In favor of containment I.E keeping Crypto separate from the financial System that's because they know secret Connections would inevitably form so This leaves one option and that's to Regulate crypto specifically with the Same risk same regulation principle If you've watched any of our recent Videos about crypto regulations you'll Know that this principle could turn Crypto into another arm of the existing Financial system which would defeat its Purpose One of the entities that's been pushing This principle the hardest has been the World economic Forum or weft which the Authors cite many times in this section For developing countries specifically The authors recommend they get their Monetary business in order so that There's no incentive for crypto adoption Indeed if the central banks and Governments manage their currencies Properly then crypto probably wouldn't Exist because there wouldn't be a need For it to exist they only have Themselves to blame at the end of the Day With a bit of luck crypto will force Them to be a bit more responsible going

Forward So then what does all of this mean for The crypto Market well in short it's Very bullish The central banks seem to be aware that Crypto adoption is growing fast and that It's ultimately due to deficiencies in The existing Financial system which they Know they probably can't fix These deficiencies are especially acute In developing countries and for good Reason The US dollar is the world's Reserve Currency and it's used in up to 96 Percent of international trade in some Regions Unless a country has lots of resources Then chances are that it has a hard time Getting its hands on US dollars for These countries the only way they can Get their hands on US dollars is to ask For a loan from the IMF or the World Bank if you've watched any of our videos About these entities you'll know these Loans come with lots of conditions which Are typically in favor of the US and U.S Based corporations now the consequence Of this is that these indebted Developing countries just can't get Ahead as pointed out by macro analyst Lynn Alden only a handful of developing Countries have managed to become Developed over the last 50 years For the ones that managed this it was

Due to their natural resources Especially oil some of the only Exceptions are South Korea and Taiwan Both of whom have received significant Support from the US over the decades Probably for geopolitical purposes The rest of the developing world has Been stuck in the same place sometimes Worse and they're starting to understand Why consider that even the bis referred To quote the global Reserve currency in Their cryptoization 2.0 prediction the Key word is the it's singular logically It's a reference to the US dollar Assuming it is and it probably is then The bis's cryptoization quote actually Reads as follows if cryptocurrencies Achieve mainstream adoption they could Replace the US dollar as the world's Reserve currency now consider that this Is something that many central banks Wouldn't mind seeing remember that the Bricks are a thing this would explain The somewhat paradoxical conclusion of The bis report which is to regulate Crypto even though they know that it Will inevitably result in more crypto Adoption when you combine this Conclusion with the fact that the bis Will allow central banks to hold up to Two percent of their balance sheets in Crypto starting in 2025 you start to Realize that some central banks might be Breaking ranks in fact it's possible

They're all Breaking ranks except the Federal Reserve that would be truly Something wouldn't it And that's all for today's video folks So if you learned something new let us Know by Smashing that like button if you Want to keep learning subscribe to the Channel ping that notification Bell and Check out the recommended videos in the Description feel free to share them with All your crypto friends and if you want To accumulate crypto without getting Wrecked by fees or losing your private Keys check out the coin Bureau deals Page it's got up to forty thousand Dollars in airdrops and bonuses on the Best crypto exchanges and the biggest Discounts on the best hardware wallets The link will be down in the description Thank you all for watching and I'll see You in the next one till then stay cool Stay out of trouble and stay crypto Thank you


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