Central bank digital assets can legitimize risk in crypto space, says Standard Chartereds Geoff Kendrick

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After making waves in April with a prediction that Bitcoin would hit US$100,000 by the end of 2024, Geoff Kendrick, head of crypto research at Standard Chartered Bank, insists there are has more crypto than its most dominant digital asset.

But after last year’s turmoil, the high-profile collapse of stablecoin TerraUSD, centralized exchange FTX and a trio of crypto-friendly banks, investors need reassurance that their digital assets won’t go down. not subject to other collapses.

For Kendrick, this is where greater regulation and central bank involvement come in.

He spoke to Forkasts Jenny Ortiz-Bolivar about the crypto industry beyond Bitcoin, her hopes for greater transparency in the industry, and the acceleration of central bank digital currencies around the world.

The questions and answers have been edited for clarity and length.

Jenny Ortiz-Bolivar: You predicted a surge in Bitcoin price. But beyond that, which altcoins are you watching closely?

Geoff Kendrick: Ethereum’s upgrades to proof-of-stake in September and, more recently, the Shanghai upgrade, mean investors can drop coins that have been previously staked. Then there is the addition of Layer 2 solutions, which means speed and other concerns around Ethereum are essentially a thing of the past. So I would say that Ethereum will continue to dominate.

As for other altcoins, I like Solana. He had concerns related to FTX’s collapse in November, but he’s bounced back a bit since then. Some of the staking solutions like Lido should trade relatively well, especially since the removal of some of these staked coins in Ethereum. Well, you will probably see that Lido continues to do well given the relatively weak market right now in Ethereum compared to its smart contract competitors. It will likely improve over time.

Then, in terms of decentralized exchanges, the various concerns from November mean that centralized exchanges are now slightly less reliable than before. As a result, I would say decentralized exchanges like Uniswap should also trade well. So overall, I like Bitcoin, I like Ethereum, I like Lido about to staking, and I also like Uniswap to keep trading relatively well.

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Ortiz-Bolivar: There is a growing conversation, both positive and negative, around central bank digital assets. Where do you stand on this question? What will be the place of these assets among the stablecoins issued by private actors?

Kendrick: Central bank digital assets are becoming very important to the crypto ecosystem. There are now a number of central banks around the world looking at these issues. The Bank of England in the UK, for example, where I myself have done a lot of consulting work, plans to roll out its own digital asset in about two years.

If and when we have, say, a digital asset from the Bank of England, that will legitimize some of the private sector stablecoins, then working to legitimize the broader risk space within crypto. This will likely also help reduce the volatility of Ethereum and Bitcoin.

I would love to see central bank digital asset solutions come along with regulatory solutions, because then that would bring institutional money into the crypto space. If we fast forward a few years, it will be much more normal for global investors to have part of their pension invested not only in bonds, stocks and commodities, but also in crypto markets and assets the most liquid ones like Bitcoin and Ethereum in particular.

Ortiz-Bolivar: How do you view stablecoins issued by individuals that are already in the digital asset market?

Kendrick: There have obviously been a number of concerns over the last 12 months or so, starting with the collapse of Terra-Luna in May 2022. Around that time people started to wonder how much money was supporting actually the other stablecoins, with investors. become particularly concerned about Tether. More recently, the concern has been the US$3.3 billion held by Circle and USDC with Silicon Valley Bank. In this sense, it took worries in the traditional financial sector itself to bring down, at least temporarily, the USDC.

But the question going forward remains how many dollars are actually supporting these stablecoins. Basically, we need more transparency, which would be great for investor confidence. You’ll probably get stablecoin-specific regulations soon, as even the US Treasury has recognized that it’s necessary. In fact, I suspect that’s where the first piece of US regulation is probably heading.

Ortiz-Bolivar: When it comes to regulation, we are now seeing the United States appear to be giving up its position of relative advantage in the world of digital assets. What are your thoughts on US crypto policy and the seemingly adversarial nature of the Securities and Exchange Commission?

Kendrick: The response from the United States has been very, very slow. Unfortunately, the SEC has not taken a proactive stance in deciding what kind of assets stablecoins are, among various other issues. In other countries, the UK for example, the Bank of England is relatively pragmatic when it comes to talking to crypto users. In the EU too, we have passed the MiCA regulation, which is great.

I would say that over the next couple of years, it’s more likely that crypto streams and businesses will leave the US for Europe given some of these regulatory positives that we’ve gotten. But, ultimately, the size and depth of the market in the United States means that if and when regulation arrives, some of those European gains could be short-lived.

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