The Terra debacle has shaken the faith of many stablecoin advocates.
But where does the future lie?
Welcome to The Daily Forkast, May 30th, 2022.
I'm Megha Chaddah of Forkast covering all things blockchain.
The sudden collapse of Terra Stablecoin earlier this month has provoked many questions, including
whether central bank digital currencies are the solution for providing a reliable, stable
asset within the crypto ecosystem.
We'll take a look at that, plus a whole lot more coming up.
Let's get you up to speed from Asia to the world.
Join thousands of NFT traders who already start their day on CryptoSlam.
Let's kick off with India's plans for its central bank digital currency or CBDC.
In its annual report, the Reserve Bank of India says it is examining appropriate design
elements for the digital rupee in order for it to be implemented with as little disruption
as possible.
The report goes on to say that the CBDC needs to conform with the central bank's objectives
for monetary policy, financial stability and efficient operations of currency and payment
systems.
Back in February, Finance Minister Nirmala Sitharaman said the RBI would be developing
a blockchain based digital rupee while the country's 2022 finance bill included an amendment
to the RBI Act 1934 to provide a legal framework for it.
Meanwhile, India has discouraged investment in digital assets by imposing a 30% tax on
crypto income, and senior central bank officials have called for a ban on crypto.
Meantime, Terra's woes continue.
The much anticipated launch of the Terra 2.0 blockchain hasn't inspired investors with
the brand new lunar token looking like it may be dead in the water.
The new lunar has plummeted around 70% since it opened for trading after Terra 2.0 launch
on Saturday.
It peaked at almost US$19 soon after its debut, but had fallen to below $6 by Monday morning
in Asia.
Terra tweeted out that users can make use of the new Luna by staking it on the mobile
wallet Terra Station, as well as using it on decentralized applications and trading
on exchanges.
The token is being traded on exchanges, including Kraken, OKX and Huobi Global, with Binance
saying it will list Luna from tomorrow on its innovation zone, where it warns that the
listed tokens may have increased volatility and pose higher risks.
South Korean DeFi expert Kevin Ahn told Forkast that his main concern is that the Terra ecosystem
functioned based on the UST stablecoin and without it as a priority, the ecosystem built
on Terra won't be compatible with Terra 2.0.
You can find those stories and more at Forkast.News.
Well, sticking with that theme, the Terra Luna fiasco has shaken the faith of many in
Stablecoins, and at the same time it has emboldened advocates for central bank digital currencies.
So what might the next steps be?
Forkast's Lachlan Keller reports.
Terra's USTC differed from other major stablecoins like USD Coin, Binance USD and Tether, as
it relied on an incentive based algorithm to maintain its dollar peg, while others claim
their dollar peg is backed by hard assets.
But one expert warns that while Stablecoins have formed a critical pillar of the crypto
industry, any one of them could have their peg undermined.
All stablecoins can be subject to a draw down, as we have seen with UST and the de-pegging
for a moment with USDC.
So let's not pretend that Stablecoins are somehow an actual real safe haven.
As well as creating turmoil in crypto markets, the Terra crisis prompted U.S. Federal Reserve
Vice Chairwoman Lael Brainard to call for action, saying that whether a regulatory framework
or a digital dollar were considered, it should be robust to the future of the financial system.
Brainard said a CBDC could coexist and complement stablecoins by providing a widely available,
government backed means of payment.
CBDCs can also help their governments ensure the relevance of their currencies as a means
of transaction and store value in a fast digitizing world, as well as cutting the cost of cross-border
payments.
However, Caselin points out that with governments increasing money supply to mitigate the economic
fallout from the COVID 19 pandemic, neither stablecoins nor CBDCs offer a solution for
preserving wealth.
Stablecoins, if they are pegged to fiat currency, ultimately are a depreciating currency.
Ultimately, they suffer debasement.
CBDCs are not the solution they add to the money supply and will basically exacerbate
inflation or devaluation.
Plus, they introduce a whole lot of uncomfortable features around surveillance and monitoring
and just even stronger capital controls.
Caselin goes on to argue that despite Bitcoin's recent price falls with increasing global
institutional adoption, it could be the ultimate winner.
When it does reach that global adoption - let's say 60% of the world, a bunch of national
reserves, we have to expect that Bitcoin becomes more stable and as it becomes more stable,
it will have reached its goal, which is to be the ultimate stablecoin it will appreciate
over time because of its sound money principles instead of depreciating over time because
of its fiat principles.
For Forkast, I'm Lachlan Keller.
Meanwhile, in the Philippines, the number of unbanked Filipinos has decreased as more
and more people embrace digital finance.
So how are digital banks stepping up to support the daily needs of Filipinos amid the pandemic?
Forkast Jenny Ortiz reports from Angono, Philippines.
The latest data from the Bangko Sentral ng Pilipinas or BSP showed that 41 million Filipinos
or 53% of the country's adult population remains unbanked.
But the onset of the pandemic has forced millions to rely on digital banking, which helped the
number of unbanked Filipinos to go down.
The pandemic has forced us to take the digital leap.
I have to say that we Filipinos, resilient as we are, have embraced technology, innovation
and digitalization.
The numbers bear this out.
In the financial sector, over 4 million digital accounts were opened at the onset of the community
quarantine to facilitate digital payments and e-commerce transactions.
Despite this development, the BSP noted that a lack of awareness of online financial service
offerings, any preference for cash stood as the major barriers to the shift online.
Speaking to Forkast, Lester Cruz of UNO Digital Bank said that financial and digital literacy
are key to address concerns of Filipinos foregoing digital.
With the increasing digitalization comes the increasing pressure on consumer protection
capabilities and resources.
The pandemic has brought public concerns on the prevalence of online scams and lack of
cybersecurity.
Aside from adopting product security features and protocols, improving financial and digital
literacy and education is our first level of defense against this.
Cruz said that the central bank can be credited for ensuring that digital banking is safe
and secure.
He added that the future of digital banking in the Philippines is bright, as it has helped
support the daily needs of Filipinos.
Whether it be for transferring funds or paying bills, the digital banks made it more convenient
and more importantly, safer for Filipinos to do their daily banking transactions in
the safety and comfort of their homes.
And maybe today, since it's still the pandemic, we're talking about safety.
But soon enough or tomorrow, it could be primarily because of the ease and convenience.
With these benefits, Cruz concluded there's no other way but to go digital.
For Forkast, I'm Jenny Ortiz in Angono, Philippines.
And finally, the Hong Kong edition of Art Basel took place over the weekend and in a
clear demonstration of the growing role NFTs are playing in the traditional art world,
this year's Fair featured an exhibition dedicated to them.
Visitors to the NFT Gallery, which was built on the Tezos public blockchain, were able
to live mint and claim their own generative NFT artworks as gifts as a part of the interactive
installation and Tezos told Forkast the exhibit was attracting a diverse crowd of visitors.
I would say there's a wide range of people coming in.
We're very happy to see people who, for example, are at the start of the journey, you know,
like people asking from something as simple as, hey, you know, what are NFTs?
And we explained to them what NFTs are, we take them to the art.
We explain to them how this is the next frontier of traditional art.
And then we also have folks who are already, you know, have launched their NFT journeys,
whether they are artists or whether they are collectors or whether they are enthusiasts.
So, you know, this is a great way for them to really check out some of the different
artwork.
Tulsiani says that Asia is the biggest contributor to increasing sales in the art industry and
that four of the five most NFT curious countries are in Southeast and Central Asia.
So there's massive potential in the market.
And that's The Daily Forkast from our vantage point right here in Asia.
For more, visit Forkast.News.
I'm Forkast's Megha Chaddah, other until next time.