Echoing the words of former Microsoft CEO Bill Gates, the incoming governor of the Philippines’ central bank has dismissed digital assets as based on the “greater fools theory.”
New Governor Rejects Crypto
The Bangko Sentral ng Pilipinas (BSP), or the Central Bank of Philippines, is slated to have a new governor in chief in the form of economist Felipe M. Medalla. However, his appointment as BSP head might not bode well for the country’s burgeoning crypto industry as Medalla has strongly denounced cryptocurrencies, claiming that the digital asset is based on the “greater fools theory.” This theory basically postulates that an investor can earn profits from overpriced items if there is a “greater fool” that wants to buy at an even higher price.
In a virtual discussion on June 14, Medalla stated,
“Every Bitcoin buyer that I know does not use (cryptocurrency) for anything… The only reason you’re using this is you think somebody else will buy it from you at a higher price. That’s a very scary investment.”
Medalla Calls For KYC, Stricter Policies
Based on the privacy focus of most cryptos, Medalla has derived that it is an ideal tool for hiding funds from the government. He has also called for vigilant KYC measures for crypto, claiming that since it is a necessity in the fiat and physical world, it should be similarly applied to the virtual world. He has also called for the imposition of anti-money laundering policies on digital assets, like those policing fiat currencies and assets. His statements indicate that instead of regulations to prevent wrong-doing in the market, he is considering a more heavy-handed approach to the digital assets industry in the Philippines.
Bill Gates Feels The Same Way
Medalla’s comments strongly resonate with those of former Microsoft CEO Bill Gates, who had cited the same theory for crypto at a TechCrunch event last week.
Gates had said,
“The value of crypto is what some other person decides someone else will pay for it, so not adding to society like other investments…investors only make profits by selling them to a greater fool.”
Gates had also criticized NFTs at the event, sarcastically commenting on the wildly popular Bored Ape Yacht Club collection, saying, “expensive digital images of monkeys would surely improve the world!”
The State Of Crypto In the Philippines
Medalla’s criticism of digital assets could spell trouble for the country’s growing crypto industry. As per Chainalysis’ Crypto Adoption Index 2021, the Philippines ranked 15th in digital asset adoption. NFT games based on a Play-to-earn model have also garnered a significant base in the country. In addition, BSP’s announcement in January 2021 that it would be issuing digital asset licenses to crypto service providers led to a 71% surge in crypto investments in the first half of last year.
Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.
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