Bitcoin awareness and adoption is absolutely on the increase yet it is yet to accomplish mainstream adoption. The world’s biggest digital currency, as indicated by FSB report isn’t a risk to the stability of the worldwide financial framework.
Presently, according to the most recent report titled “Competition issues in the Area of Financial Technology (FinTech)” of European Union (EU) cautions that central banks of the world can possibly influence bitcoin among different digital currencies.
The report is appointed by the European Parliament Committee on Economic and Monetary Affairs (Econ), which directs the choices made by the European Central Bank (ECB). Apparently, if central banks and banks issue their own particular digital currencies, it could have terrible impacts for bitcoin and others.
“The arrival of permission cryptocurrencies promoted by banks, even by central banks, will reshape the current competition level in the cryptocurrency market, broadening the number of competitors.”
It has been determined by the report that the cryptocurrency market is
“characterized by competition between currencies (inter-cryptocurrency market) and competition between exchanges (intra-cryptocurrency market).”
The report expresses the anti-competition components, standardization of distributed ledger technology (DLT) and other technical protocols, denial of access to the passages of traditional banking activities, and private or open consortia agreements in connection to technical standards.
So, if central banks and banks enter into the crypto market with their own digital currency, “the market power of banks in traditional banking services might be used to limit competition in the cryptocurrency market through pre-emptive acquisitions or predatory pricing schemes.”
EU has repeatedly emphasized that “more worrisome may be the use of cryptocurrencies promoted by banks, even by central banks.”
Though, “these types of cryptocurrencies may broaden the number of competitors but could also help leverage the market power of banks in traditional banking services” points out the author.
“If banks decide to enter the field of cryptocurrency payments, they may try to block access on interoperability grounds, in a similar way to that observed in the market for payment services. Cryptocurrencies developed by large financial players, however, are still at a relatively early stage, and it is not possible to assess with any degree of certainty the type of competition challenges that they may pose in the medium term.”