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French bank BNP Paribas (BNP) is reported to be making a huge entry into the crypto space, looking to partner Swiss-based digital assets firm Metaco to unveil a crypto custody service. This is according to a report by CoinDesk published on Tuesday, and which cited sources familiar with the development. Are you looking for fast-news, […]
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Tesla’s $1.5 billion Bitcoin purchase may have finally pushed cryptocurrencies onto the radar of huge financial institutions, but not necessarily onto their balance sheets.
This was one of the inferences implied by Chi Lo, Senior Strategist at BNP Paribas Asset Management. According to the exec, “crypto prices will eventually crash,” triggered by a shift in monetary policy or regulations.
In a blog published on the BNP Paribas website, Lo addressed the rising popularity of cryptocurrencies as an asset class and critiqued its use as a currency. According to Lo, Bitcoin is not money, nor is it a store of value, but rather a “vehicle for speculators.”
In fact, the analyst believes that the reasoning behind Bitcoin’s popular ‘store of value’ narrative is flawed in the sense that Bitcoin’s fixed supply is a problem for the asset and not necessarily a benefit. He argued,
“Contrary to the conventional wisdom that the finite supply of bitcoins and cryptos is a benefit and protects value, it is in fact a big problem for them being considered as money.”
The maximum number of Bitcoins that can ever be mined is 21 million. In the said blog, Lo claimed that these supply limitations make cryptocurrencies unsuitable as legal tender because a static money supply would deprive central banks of the ability to implement countercyclical policies.
The strategist’s final argument for his case against cryptocurrencies was that countries will take steps to protect their monetary systems and currencies and their ability to tax and manage the economy.
“The more people believe cryptocurrencies are money, the greater the risk of government intervention in this market,” he added, going on to say that the emerging trend of official digital currencies, or CBDCs, is a sign of central banks fighting back.
While crypto-proponents would certainly have a long list of counter-arguments to Lo’s statements, an unsettling reality could be the fact that there may be some truth to the last point he makes about government intervention. In countries like China, private cryptocurrencies are already frowned upon, with the nation also in the process of issuing its own CBDC on a wider scale soon.
On the contrary, banks like BNY Mellon have recently come out in support of cryptocurrencies offering custodial solutions for digital assets. Given its strategist’s thoughts on the matter, it is unlikely that BNP Paribas will do the same in the near future.
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BNP Paribas’ securities arm has partnered with Digital Asset to develop a number of real-time trade and settlement applications using DAML-based smart contracts, the firm announced on Sept. 15.
The new DAML-driven apps will connect BNP Paribas Securities Services with major global stock exchanges like the Australian Securities Exchange, or ASX, and the Hong Kong Exchange, or HKEX.
The apps will provide market participants in the Asia Pacific with real-time access to ASX’s and HKEX’s upcoming blockchain-based trading and settlement platforms. BNP Paribas will specifically connect to the ASX’s blockchain-powered equity transaction platform known as the Clearing House Electronic Subregister System, or CHESS.
Alongside connecting various blockchain-based platforms, the new DAML apps will be also available to clients in markets that have not integrated distributed ledger technology, the announcement notes.
One of the apps comprises a smart elections service for corporate actions. Due in 2021, the app is designed to provide instant access to all the corporate action chain data like dividend reinvestment or purchase offer decisions. It is expected to reduce processing times and improve operational efficiency as well as enable investors to make decisions based on the most relevant market data.
Introduced in April 2016, DAML stands for Digital Asset Modeling Language and represents an expressive language designed for financial institutions to model and execute agreements through DLT and smart contracts.
Both the ASX and HKEX have emerged as partners of Digital Assets. In 2019, the ASX and Digital Asset signed a Memorandum of Understanding stating that the stock exchange will support DAML as part of its CHESS blockchain registry. As reported, ASX’s CHESS system is coming in 2021.
In October 2018, HKEX partnered with Digital Asset to accelerate post-trade processes and reduce settlement risks.
The DAML smart contract language is seeing increased implementation within major global blockchain initiatives. On Sept. 14, China’s national blockchain project, the Blockchain Services Network, announced DAML support to develop decentralized applications on its platform. In early September, Singapore’s major investment holding company, Singapore Exchange, issued its first digital bond powered by DAML.
Image Credit: Refer to Source
Author: Refer to Source Cointelegraph By Helen Partz
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