How are Central Banks Getting into Crypto?
We’ve been hearing about institutional money getting into crypto for a long time, and while it seemed like wishful thinking, we are finally seeing national central banks legitimizing crypto. China has been at the forefront in this space, and its central bank is already trying a rollout of its own central bank digital currency (CBDC). This could be a game-changer, and it could even have a domino effect all over the planet. Let’s take a look at how central banks are getting into crypto and why.
China’s Experiment
China’s experiment is the largest of its genre and the one with the biggest ramifications. The government is expecting to officially roll out its digital renminbi at the next winter Olympics. This could start legitimizing the cryptocurrency and pave the way for national cryptocurrencies across the world.
China deciding to roll out their coin for the Olympics could have an international impact as well. Athletes and other persons gravitating around the event will start to get familiar with the coin and enjoy some of its benefits. They will then be more likely to look into crypto when they get back home and spur more interest in cryptocurrencies in general. This could push other governments and central banks to look into cryptocurrency in close detail.
Japan’s Central Bank to Launch Own Crypto
In early April, the Japanese central bank made its CDBC plans official. The goal is to see if a digital yen will be feasible. The organization already released its full plans, which should have two concept phases and a trial.
Japan is already major hub for cryptocurrency and blockchain. Crypto has also become part of the trading landscape in Japan, with traders using both domestic as well as overseas platforms to participate in the booming crypto markets.
There are still many obstacles to the implementation of a national cryptocurrency in Japan, however. For one, it is still a very cash-heavy society, and many transactions are still being made in cash. This means that more emphasis will need to be put on using this cryptocurrency offline. There are also some issues with domestic payments being processed during business hours, and cryptocurrency projects that are trying to tackle it. One of the most interesting is Mizuho’s J-Coin, which isn’t supported by a blockchain.
Other Countries are Following Suit
Asia is not the only place where national cryptocurrency projects are being rolled out. The Caribbean is another major hub for national cryptocurrencies with the Bahamas and Jamaica rolling out their own projects. The Eastern Caribbean is also trying a cryptocurrency that is not blockchain-based.
Things are moving fast in the crypto space and central banks seem to finally be paying more attention to them. This could be an indication of the future, and everyone in the space needs to pay special attention to developments to keep up.
