The cryptocurrency market has brought huge gains to its investors over the past few years. However, in addition to these gains, there were also big losses in some periods due to unexpected regulations and even market manipulations. The Reserve Bank of Australia also warned investors of the current risks that could wipe out all gains.
Cryptocurrency market risks
According to an official from the Reserve Bank of Australia, the significant gains that investors have experienced in the cryptocurrency market may be wiped out due to rapidly changing trends in the industry.
Tony Richards, head of payments policy at the RBA (Reserve Bank of Australia), stated that energy use concerns and being associated with illegal activities pose the biggest risks to cryptocurrency market investors.
Richards isn’t the only one with this idea. So far, multiple central bank and finance commission officials have made statements stating that the industry poses great risks to the environment and remains a popular tool in the hands of criminals.
Stablecoins are important
Richards also touched on the stablecoin industry. RBA officials stated that central bank digital currencies could find a niche as a use case.
In addition to the importance of applying digital technologies in traditional banking and fund management, the Reserve Bank of Australia recognized the importance of new innovation in payments. The bank looks forward to following all the reforms in the financial sector.
Besides strong growth, the cryptocurrency industry is too volatile to be fully implemented by traditional financial institutions. Various industry experts believe that the volatility “problem” will resolve itself with further development of the industry.