The recent collapse of the FTX trading platform has raised lots of questions about the future of cryptos and their viability. However, an investment expert from HSBC said that it is important to distinguish between cryptos and the ecosystem of which they are just a part.
Notably, the efficient organization of assets is something that blockchain technology looks keenly at, and is among the benefits that this nascent technology brings to the market. Investors need to be aware that there is a huge difference between cryptos and blockchain technology.
HSBC’s Mr. Jeffrey Yap, a tech proponent who heads the investments and wealth solutions team for Southeast Asia at HSBC Global Private Banking and Wealth, stated that blockchain technology has massive potential as part of the financial and payments infrastructure for the future.
He said:
“If you look back at a time when you write letters, now you have e-mail and messaging. That is what blockchain represents.”
Blockchain applications can change industries and create a highly connected world that can assist with information and various forms of transparent authentication. Moreover, it means that the processing time can be reduced considerably. The processing time is shorter and the costs involved are reduced extensively.
The recent collapse of FTX, crypto’s third-biggest exchange, comes at the end of a turbulent year for the sector, which has seen a steep drop in price for bitcoin and other digital assets.
Singapore Exchange market strategist Geoff Howie agrees that efficiency in financial services is one of the positives of this technology. He mentioned:
“There has been a growing interdependency between the technology and financial sectors, which bodes well for delivering more efficient financial services.”
“But when you attempt to make a particular fast-developing economic process investable or tradable, there is much work involved, and if this is not regulated sufficiently, then, of course, it comes with much trading risk on top of market risk.”
Mr. Howie’s opinion is that more regulation might be necessary:
“Just last month, the IMF Financial Stability Report maintained that on a global scale, the crypto asset market correction had added an extra urgency to the call for comprehensive and consistent regulation and adequate supervision.”
He added:
“The report added that global crypto asset service providers delivering core functions and generating key risks should be licensed, registered or authorised and thus subject to regulation, similar to how the financial sector operates.”
ST Invest editor Tan Ooi Boon said that price movements in cryptos are mostly based on little or no fundamentals, but people choose crypto since they find it quite easy to understand. He believes that banks and traditional financial institutions need to respond to the challenge posed by the attraction of cryptocurrency.
Buy Bitcoin NowHe advised:
“Be transparent so that people know what they’re buying… simplify your products by making them easier to understand and easier to calculate.”
He believes there is an opportunity to dissuade people from voting for cryptocurrency in case they understand how to invest their money wisely and safely.
“After all, if we don’t do that, one dollar that goes to crypto is one dollar that is siphoned away from traditional investments.”
