Swiss National Bank wary of Bitcoin and Ethereum

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Swiss National Bank Chairman Martin Schlegel recently said the bank is “wary” of digital currencies like Bitcoin and Ethereum.

Speaking at an event in Brugg, Switzerland, he highlighted how the fluctuating value of such currencies made them impractical for payments. Additionally, their links to crime and intensive energy use are some of the reasons they remain a “niche phenomenon.”

Despite this, the Swiss National Bank embraces some of the industry’s cutting-edge technology. It’s currently running pilots to test central bank digital currencies (CBDCs), to ease payments between financial institutions.

Offering practical anonymity and not relying on technology, Schlegel said cash would continue to play an essential role in the Swiss payments system for some time.

Perception is reality

While Schlegel’s comments are factually accurate, many digital currency proponents will argue that they are unfairly biased or focused only on the negatives. BTC and ETH supporters will claim that criminals also use cash, the existing financial system is incredibly energy-intensive and inefficient, and the volatility of digital currencies will level out as they are used more in global commerce.

While these points are valid, perception is a reality to a large extent, especially for officials who have to answer to various stakeholders, from environmentalists to financial regulators.

Like it or not, Bitcoin, Ethereum, and other digital currencies are viewed as highly volatile speculative assets rather than digital currencies, and they have been promoted as such by influencers like Anthony Pompliano, Max Keiser, and others. Those who advocate for Bitcoin as a peer-to-peer electronic cash system have warned of this outcome for a decade but were shunned and dismissed.

Likewise, digital currencies like BTC are inextricably linked to crime in the minds of policymakers. The Silk Road saga, in which Ross Ulbricht built a darknet marketplace offering drugs, weapons, and assassination markets, was one of the earliest uses for BTC. As a consequence, many view it as a tool for drug dealers and other undesirables to make payments and launder cash.

Similarly, the argument about energy use stems from BTC’s inherent lack of utility. It would be much easier to defend if it was powering a high volume of daily transactions, including payments for commerce, micropayments for applications, and all of the innovative use cases for tokens.

Yet none of this is happening on BTC, so it isn’t happening at all, as far as industry outsiders are concerned. Truthfully, all this and more is happening on the BSV Blockchain and a few other utility blockchains, but the industry’s biggest voices won’t discuss that.

Central banks continue to innovate using blockchain

Despite the unfortunate consequences of BTC advocates’ chosen path, central banks like the Swiss National Bank, European Central Bank, and others are utilizing digital ledgers and blockchains to innovate.

Project mBridge, previously overseen by the Bank for International Settlements (BIS), is an example of how blockchain and tokenization are being used to speed up cross-border payments. Many other examples include the ECB’s progress with the digital euro and China’s digital yuan.

Large financial institutions like BlackRock are also pioneering the tokenization of everything. BlackRock CEO Larry Fink said he sees Bitcoin and Ethereum as “stepping stones” to tokenization, while the BIS foresees the total value of tokenized assets at $2 trillion by 2030.

Unfortunately, the opportunity for Bitcoin and Ethereum to be the global blockchain underpinning CBDCs and institutional tokenization is slipping away. However, there’s still a chance, and regardless of what happens with central banks and financial giants like BlackRock, entrepreneurs and established businesses will continue to build scalable blockchain solutions on scalable utility chains.

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