Reluctant Acceptance of Cryptocurrency at WEF Meeting in Davos

Two panels at 'Creating a Shared Future in a Fractured World' were devoted to cryptocurrency.

This year’s meeting of the World Economic Forum, entitled ‘Creating a Shared Future in a Fractured World’, concludes tomorrow.

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Held in Davos, a resort in the Swiss Alps whose name is now synonymous with the meeting, the event brings together over two thousand top politicians, economists, business leaders and journalists. They meet for four days to discuss the world’s most pertinent issues. The admission fee is $19,000 per person.

Now, 2017 was the year of cryptocurrency, as I think that most would agree. Accordingly, one would expect this to be a major topic for discussion at the event, and indeed two panels were devoted to this subject – as former US Secretary of State John Kerry said to Cointelegraph: “People are investing in it, it’s serious amounts of money and it’s got value so it’s going to be talked about.”


However the first session on the subject was leadingly called ‘The Crypto-Asset Bubble’, and the subject wasn’t mentioned once in an hour-long panel called ‘Strategic Outlook for the Digital Economy’, according to Cointelegraph.


Perhaps this is a reflection of the understandable reticence on the part of the financial establishment to accept what is fundamentally a new competitor. Axel Weber, chairman of UBS, a Zurich-based financial services company for high net worth individuals, said at the event that his firm advises clients not to invest in the assets.

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Attendees weigh in on Bitcoin

Only yesterday, we reported on Nobel prize-winning economist Joseph Stiglitz and his scepticism as to the value of Bitcoin (he thinks that it has none whatsoever). Swiss National Bank chairman Thomas Jordan called for regulation in a speech yesterday, saying: “Similar activities should be similarly regulated, and Bitcoin and other cryptocurrencies have some characteristics of other investment instruments.” Stiglitz thinks that by regulating Bitcoin, Bitcoin will be neutralised, as its only advantage is its lack of regulation.

Richard Cook, head of emerging technology at Royal Bank of Scotland, said to the Financial Times: “We are sitting down around this table trying to decide whose lunch we are going to eat. Because blockchain’s benefits come from decentralisation there is little point replacing one technology with another without changing the business model.” (I have included the first half of that quote on the assumption that he was speaking metaphorically.)

Jamie Dimon is a sceptic no more

Jamie Dimon, famous for calling Bitcoin a fraud and then recanting this heresy, was apparently reluctant to answer questions from Cointelegraph about his earlier comments on Bitcoin, but did protest: “I’m not a sceptic!”

Theresa May noncommittal

In attendance too was British prime minister Theresa May. She gave an interview with Bloomberg, which was published with the title “May Says She’ll Look ‘Very Seriously’ at Action on Bitcoin”.

She did indeed say that in the interview, but the question posed to her by interviewer John Micklethwait (Bloomberg’s editor-in-chief) was quite leading: “Another area is cryptocurrencies, things like Bitcoin – as their name implies, they’re partly to hide money, many often used in the activities you’ve just described [terrorism, child pornography, money laundering], from people like you, from governments. Isn’t that an area where maybe you should try to clamp down too?”

The question as asked did not really give her the opportunity to say anything positive. Her response was actually non-committal: “In areas like cryptocurrencies, like Bitcoin, we should be looking at these very seriously precisely because of the way they are used, particularly by criminals,” she said.

As this was couched within her discussing how eager the UK is to develop its own tech companies and attract them from abroad too, especially with Brexit looming, this writer felt that the title was a little misleading, and her response could be seen as positive as concerns cryptocurrency.

Regulation regulation regulation

U.S. Treasury Secretary Steven Mnuchin was also in attendance, and his attitude was similar – he urged attendees to join his agency in regulating cryptocurrency so as to make sure that they are not used for illicit activities. “We encourage fintech and we encourage innovation, but we want to make sure all of our financial markets are safe,” he said.

Christine Lagarde of the IMF parroted this in a speech to attendees: “The anonymity and lack of transparency and the way in which it conceals and protects money laundering and financing of terrorism, is just unacceptable. It needs to be taken into account but then there will be innovations coming out of these movements.”

The yearly gathering in Davos began in 1971 as a European economic forum called the European Management Forum, and changed its name to the international one that we are familiar with today in 1987. As of 2011, annual membership to the WEF cost between $52,000 to $527,000 (the latter sum would buy you the title of ‘strategic partner’). In 2014, WEF raised annual fees by 20 percent, according to the Financial Times.

 

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