A firm believer in formal banking systems, eminent banker Uday Kotak feels gold is the only alternative currency that has worked ever without any state support and sees no regulatory backing in immediate future for numerous cryptocurrencies that have cropped up.
The most famous among all, bitcoin has been seeing a huge traction lately even as its prices have been extremely volatile, surging to close to USD 20,000 per unit a few weeks ago but only to fall below USD 10,000 soon after.
Kotak, who has overseen one of the biggest success story of a new age bank as head of Kotak Mahindra Bank, also said that real estate market is unlikely to recover anytime soon as the money has moved out of land to financial assets.
“I am a believer that the only crypto currency that has worked in the world is gold. That is also not issued by any state anywhere and unless we reach a stage where we have an alternative currency that has same trust of people as that with gold, it will be very difficult for the authorities to allow any new crypto currencies,” Kotak told PTI in an interview.
Kotak was in Davos last week to attend the World Economic Forum (WEF) Annual Meeting, where crypto currencies were one of the major points of discussion with regard to the financial markets.
The business leaders present at WEF felt that the valuations and varieties of crypto-assets now available have raised fears of an overheated market.
At the same time, some felt that with smart regulation and further innovation, crypto-assets can find a good place over the time in financial markets.
IMF Chief Christine Lagarde said that the multilateral financial institution is already looking into the issues relating to crypto currencies to analyse potential risks arising out of this new asset class due to the anonymity attached to it and the possible money laundering risks, while the US Treasury Secretary Steven Mnuchin asserted that these currencies would not be allowed at all for any illicit trades.
Lagarde, however, said that the new technologies that have led to creation of crypto currencies need to be analysed properly and felt that innovative technologies can help improve the financial inclusion scenario in the world.
Bitcoin’s price has increase more than 12-fold in the past four years, and the combined market of crypto-assets is now valued at more than USD 500 billion. Such valuations have caused many to think that the market is overheated.