The CEO of Citigroup has said that governments will have to issue their own state-sponsored digital currencies to prevent bitcoin becoming a threat to the financial establishment.
At an interview at the Bloomberg Year Ahead summit in New York, Michael Corbat, CEO of Citigroup, said:
I don’t think governments are going to take lightly other people coming in and potentially disrupting their abilities around data, around tax collection, around money laundering, around know-your-customer. It’s likely that we’re going to see governments introduce, not cryptocurrencies – I think cryptocurrency is a bad moniker for that – but a digital currency.
These comments come at a time when digital currencies are experiencing a surge in value, particularly bitcoin. The number one digital currency has seen its value rise close to $7,800, due in part to yesterday’s announcement that bitcoin’s protocol upgrade, SegWit2x, had been suspended. It has since dropped in value and is currently trading at $7,174, according to CoinMarketCap.
Despite bitcoin’s continued value over the last few weeks, many opponents have spoken out against it. Recently, Frederic Oudea, the CEO of Societe Generale, said that bitcoin has no future due to its anonymity and the fact that governments are continually working at regulating them.
Elsewhere, billionaire technology investor and entrepreneur Mark Cuban thinks that bitcoin is a store of value, but not a currency due to its limited capacity to scale to the level of Visa and Mastercard.
Jamie Dimon, JPMorgan Chase CEO, also doesn’t think regulatory authorities will permit digital currencies to remain without some oversight. In September, he’s reported as saying that:
Someone’s going to get killed and then the government’s going to come down. Governments like to control their money supply.
The possibility of a state-issued digital currency may be taking place sooner in some countries than in others. Russia is one such location that has been given the green light by Russia’s president, Vladimir Putin, to launch the CryptoRuble. Nikolay Nikiforov, the communications minister, is reported as saying that once the CryptoRuble is issued the mining of other digital currencies will be banned and that it will be regulated by the government.
In October, Oleg Fomichev, Russia’s deputy minister of economic development, said:
This mustn’t be a private currency, but the one, which is issued by the state, controlled by the state and enable to provide circulation of digital money in light of the digital economy.