Digital money systems built on top of blockchain networks must retain the qualities of physical money to attract more users in developing countries — and they must be able to do so without regulatory constraints, according to Circle CEO Jeremy Allaire.
In a round table at the annual meeting of the World Economic Forum entitled “Remittances to Recovery: A New Era of Digital Money”, Allaire discussed all of the characteristics that make physical money an ideal medium of exchange. There’s a reason “cash is king,” he said, referring to the portability of physical money, its privacy and the role it plays in ensuring individual sovereignty.
“Cash is a really good product […] people like cash. It’s private, it’s secure, it’s bearer, it provides final settlement between you and a counterparty.” he said and added:
“There’s a lot of energy in the world directed towards removing the features that make cash so powerful. There’s a reason people in countries around the world prefer cash to mobile money because it gives them more self-sovereignty there, it gives them more economic freedom.
The comments from Allaire responded to Asif Saleh’s observation that mobile wallet transfers are limited by the destination country’s lack of adoption of digital technologies. Saleh is Executive Director of BRAC Bangladesh, a non-profit poverty alleviation organization.
At the #WEF22, @Ripple CEO Brad Garlinghouse reveals how much time he’s invested in ensuring SEC compliance, but added, “When the rules of the road aren’t clear, it’s very difficult to deal with.”
(message per @tomfarrencrypto) https://t.co/ycTiFfsyki
— Cointelegraph (@Cointelegraph) May 23, 2022
“A lot of the political and regulatory issues that limit the power to move money have to do with depriving people of their economic freedoms,” Allaire said. “We need to think about solving these problems by building models that actually offer forms of digital money that have the properties that make cash attractive to people.”
Something as simple as a SIM card allows people from all over the world to participate in the global internet. That mobile identity, Allaire said, should also allow people to integrate digital wallets where they can send and receive cryptocurrencies like USD Coin (USDC).
“There are models with which this works […] Politicians and regulators need to adapt to this, rather than trying to make everyone conform to their limits.”
Remittances offer relatively stable capital flows to low-income countries as migrants send money back to their families. Remittances are estimated to account for about 4% of gross domestic product in low-income countries and about 1.5% of GDP in middle-income countries. Decentralized finance advocates claim that DeFi could reduce remittance fees by billions of dollars annually.
Clarification: The information and/or opinions expressed in this article do not necessarily represent the views or editorial line of Cointelegraph. The information contained herein should not be construed as financial or investment advice. All investment and trading movements involve risk and it is the responsibility of each person to conduct their proper research before making any investment decision.