The CEO of Societe Generale has said that digital currencies such as bitcoin are unlikely to have a long-term future as governments continue working at regulating them.
Frederic Oudea, the CEO of the French multinational financial company, said to CNBC that while he believes in the blockchain he thinks that cryptocurrencies carry too much risk due to their anonymity, adding that the only benefit at present was to the people conducting the transactions.
I can’t see a future of this when I see the attention played by all governments and regulators on anti-money laundering, on anti-tax evasion, on anti-terrorism financing. The anonymity of the transaction is a problem I think which would put pressure on bitcoin.
Instead, Oudea is more in favour of a digital currency that would be backed up by fiat currency. By themselves, he doesn’t have much confidence in them being considered for mainstream use.
I think we need to be a bit more precise on what we call virtual currency at the end of the day, he said. If it’s just a way in a transaction, at some point to add something which virtually can translate on both sides into real currencies, maybe it can be used as a system. The blockchain system and the bitcoin system is very different.
Despite the fact that bitcoin has reached unprecedented highs over the last few weeks, critics of the currency still remain.
Interestingly, on Monday, Severin Cabannes, deputy CEO of Societe Generale, was reported as saying that bitcoin was in a bubble. His comments follow those of Tidjane Thiam, Credit Suisse CEO, who believes banks are reluctant to get involved with bitcoin due to fears of a bubble and its ties to illegal activities.
Oudea’s comments come at a time when bitcoin is due to undergo a hard fork on or around the 16th November, which has the potential to create two different blockchains each with its own set of coins. Even though bitcoin is currently trading at over $7,400, according to CoinMarketCap, uncertainty around what may happen to the currency’s price remains.
Many have speculated that bitcoin’s value will come crashing down while others are of the opinion that its price will continue to new heights. Ronnie Moas, market analyst and founder of Standpoint Research, has projected that the digital currency will reach an $11,000 price in 2018.
However, given the fact that the CME Group is launching a bitcoin futures contract by the end of 2017, pending regulatory approval, it may, ultimately, help remove the reluctance that many financial companies feel.