If there’s one thing that the crowd of bankers and finance types at Davos can agree on, is that banks are safe and crypto is, as one attendee put it, “inherently speculative.”
That attendee, Senior Minister Tharman Shanmugaratnam of Singapore also added that crypto assets are “slightly crazy,” as the audience laughed in agreement.
As the leaders of the world’s biggest financial institutions gathered in Switzerland for the annual meeting of the World Economic Forum this week, several bashed crypto, pointing instead to banks as a safe haven for assets.
Even as the economic tumult of 2022 brought about the bankruptcies of crypto firms like Three Arrows Capital, and FTX, the traditional banking sector emerged largely unscathed.
This feat, in the eyes of UBS Chairman Colm Kelleher, means that traditional finance firms are “systemically safe” due to years of regulation.
Kelleher said that although he believes in the underlying technology of the blockchain, “non-banks,” which includes crypto, the sector has fallen through the fingers of regulators.
“Regulators have — with respect — taken their eyes off the ball in terms of the non-banking sector,” Kelleher said at the World Economic Forum this week, according to Reuters.
European Central Bank Governing Council member Francois Villeroy de Galhau agreed, pointing to Sam Bankman-Fried’s FTX and stating that “The greatest challenge today is non-banks.”
He later added, “We should rush to some urgent non-bank regulation starting with cryptos.”
Still, Shanmugaratnam, the senior minister from Singapore, suggested that even regulating crypto using the same framework as traditional finance could pose a risk by legitimizing the asset class.
“Are we better off, just providing ultra clarity as to what’s an unregulated market, and if you go in, you go in with your own risk?” he asked rhetorically. “I lean a bit more towards the latter view.”
The crypto industry—which banks regard as a rival—has a different view of course, and are also making their case at Davos. As the Washington Post reports, well-known crypto firms like Davos are hosting parties and framing the recent tumult as a reset period that will benefit good actors.
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