• Norman Chan, former head of the Hong Kong Monetary Authority (HKMA), said that crypto will not destroy traditional finance due to its lack of intrinsic value and high volatility.
• He also said that DeFi is inferior to traditional models as investors have no protection, and that stablecoin adoption could affect fiat-based monetary policy.
• Despite this, he suggested that NFTs had potential for investors looking to make art, wine, or antique purchases.
Former Chief Executive of HKMA: Crypto Cannot Destroy Tradfi
Norman Chan, the former Chief Executive of the Hong Kong Monetary Authority (HKMA), has stated in an interview with the 21st Century Business Herald that cryptoassets like bitcoin (BTC) cannot become “currencies” because they “have no intrinsic value and their prices fluctuate too much.” He also took aim at stablecoins, saying “[Stablecoins] have many application scenarios but they cannot subvert and replace traditional finance.”
Chan warned that decentralized finance (DeFi) was inferior to centralized models as in the DeFi world investors “generally have no protection.” He said this could compromise the stability of the financial system by “getting rid of the models of regulation and trusted intermediaries.”
Potential for NFTs
The former HKMA boss conceded that despite his issues with cryptoassets, non-fungible tokens (NFTs) had a “broad” application potential for investors looking to make art, wine or antique purchases.
No Chance for Crypto Replacement
Chan dismissed the notion that crypto had the power to “replace central banks, traditional financial markets, and institutions,” claiming price volatility would prove an Achilles heel for BTC and major altcoins.
Despite his criticism on some aspects of cryptocurrency and blockchain technology, Chen suggested that stablecoins have great future potential provided they meet certain levels of investor protection and regulatory conformity.