Retiring head of MAS bashes crypto, predicting a decline in the near future

The retiring head of the Monetary Authority of Singapore (MAS), Ravi Menon, recently spoke about cryptocurrencies, revealing his skepticism and grim predictions.

According to the MAS’ head, private cryptocurrencies will not exist for much longer. He claims that these digital assets had failed the basic test of digital money, and are likely to start seeing a decline in the near future.

Menon held his speech in an event hosted by the central bank of Hong Kong, although the points he tried to make are the same as the ones in his speech during the Singapore Fintech Festival 2023.

At the time, he claimed that there were three basic failings of private cryptocurrencies. The first of them is that they have “miserably failed the test of money.” He concluded this due to their volatility, which he called the inefficiency of maintaining value. He also said that cryptos performed poorly as a medium of exchange or store of value.

Private cryptocurrencies that failed the fundamental tests of financial services will eventually exit the monetary scene, according to Singapore’s Central Bank Chief Ravi Menon https://t.co/0SsHfpdjVC pic.twitter.com/fu1sTxkRNx

— Bloomberg TV (@BloombergTV) November 28, 2023

Lastly, he added that the prices are subject to extremely sharp speculative swings, which has led many of the crypto investors to lose great amounts of money. However, despite his criticism of private cryptocurrencies, he is not entirely against the concept of digital assets.

The MAS and Menon still have hopes for stablecoins

Menon still has some hope for the potential of the process of tokenization, as well as stablecoins, which have, for the most part, managed to complete their mission in offering stability, coupled with fast and cheap payments.

Singapore central bank chief sees no place for private crypto in the monetary scene.
Ravi Menon says the country is instead clearing a path for CBDCs and regulated stablecoins.

There will not be a place for private cryptocurrencies such as Bitcoin (BTC) and Ethereum (ETH) in the…

— Taylor Harris (@TaylorHarrislov) November 28, 2023

However, given that traditional currencies also constantly see their value change, which is what enables the forex market, for example, one could argue that the situation surrounding cryptos may simply be more extreme. After all, they are not backed by any traditional asset or entity, leaving their value entirely governed by supply and demand.

However, the MAS seems to share Menon’s views on stablecoins, as it recently granted in-house approval to three companies issuing stablecoins, including Paxos Digital Singapore, StaritsX SGD Issuance, as well as StraitX USD Issuance.

It is further worth noting that the regulator still has its Project Guardian Initiative, which has launched multiple pilots surrounding the process of tokenization — taking traditional or real-world assets and giving them a digital representation in the form of crypto tokens.

These pilots were launched in partnership with several major banks, such as JP Morgan, Citi Bank, and the asset manager Apollo.