As the speculative frenzy subsides – the price of bitcoin is down 50% in the past six months, including a 15% drop in the past fortnight – Mr Aoki says it is still very early to technology born barely a dozen years ago.
But ultimately, he’s convinced it can deliver benefits, such as programmable money and “atomic” settlement to enable simultaneous and instantaneous exchange of asset securities and payments.
“We fundamentally believe that digital currencies represent the next wave of tools that will allow the financial system to meet the challenges we have faced in terms of efficiency, speed and transparency,” he said. “Whether you look at digital currencies or other forms of digital assets, they’re starting to lay a new set of foundations that will take us to that next level. We think there’s a ton of opportunity around we.
Push for consumer protection
PayPal has not extended bitcoin or any crypto offerings to Australia, where Commonwealth Bank remains engaged with the Australian Securities and Investments Commission to determine appropriate disclosures and what group of customers crypto may be offered to .
As PayPal, which is regulated as a bank in Australia, lets CBA do the heavy lifting with local regulators, Mr Aoki says in the US and UK, he sees it as “part of our mission to ‘educate consumers around this space, alongside the rest of the industry’.
A new PayPal e-commerce index to be released on Tuesday reveals that 10% of Australians own cryptocurrency, 20% want to know more about them and non-fungible tokens [NFTs]26% think cryptocurrencies and NFTs should be regulated to protect consumers from harm, and 32% are concerned about the safety and security of cryptocurrency exchanges.
In its 20-year history in online payments, “it’s taken a lot of education to put people at ease, and that whole philosophy underpins every space we enter,” he says. . “Education, a great experience, and consumer protection are among the reasons people trust PayPal over [digital currency exchanges] and some of the other companies.
Meanwhile, PayPal is closely monitoring developments in “central bank digital currencies” (CBDCs) and “stable coins,” digital assets whose value is tied to fiat currency and which, according to the Governor of the RBA, Phil Lowe, should be regulated like bank deposits.
PayPal remains open to allowing the two to move across its networks. “We are certainly looking at stablecoins and monitoring conversations in a number of capitals around the CBDC,” says Aoki.
“If there’s a big CBDC with benefits, we want to support that, if there’s a viable stablecoin that could be a medium of exchange, we definitely want to take a look at it, and if there’s are ways to facilitate the movement of traditional cryptocurrencies, we also want to be involved in these conversations.
“These different forms of currencies or assets will coexist. There is certainly a significant role for CBDCs, for cryptocurrencies and, certainly, for stablecoins. They may not be used for the same thing, but there’s plenty of room in the ecosystem for these things to co-exist.
Biden’s task force
Last week, the Australian government said the Treasury would pursue a project to define the functionality and usefulness of different crypto “tokens” as it considers new regulations and stronger consumer protections. It was an example of the line between innovation and user protection, which the US government under President Joe Biden is also balancing, Aoki said.
President Biden’s executive order on cryptography, signed in March, was a breakthrough, Aoki said, as it advocated a “whole of government” approach that created a catalyst for a richer set of discussions, as states States seek to attract innovative Web3 companies. while minimizing common scams and frauds in the space.
“There is always a balance between making sure the proper safeguards exist to prevent abuse and the worst excesses, but at the same time we see plenty of opportunities for innovation to happen responsibly in the space” , he said. “If you can create the right safeguards and allow innovation to thrive…that’s the balance regulators in the US and most other countries are trying to strike.
“There has been a subtle shift over the past six months in the United States towards a pro-innovation stance, which is saying that this industry and these tools and technologies exist, there are opportunities and positives that could come out of it. , and now let’s make sure we have the right structures to make sure the risks and inconveniences are minimized.
Like others in the crypto community, Mr. Aoki is awaiting the Ethereum blockchain “merger”, expected in mid-September, which will massively reduce its power consumption and be a step forward in allowing it to process volumes. more important.
“For this space to become mainstream, it needs to address issues of scale, cost, and environmental impact, and it’s encouraging to see the Ethereum community starting to tackle this issue head-on and trying to move the protocol to a place that promises marked improvements. in all of these areas,” he says.
“Assuming they are successful – and the tests were – it makes the Ethereum network a real contender in this next generation of business in this space.”
On decentralized finance (DeFi), which allows traditional banking functions such as borrowing and lending to happen on blockchains, including Etheruem, he says the need for greater consumer education is clear. and that the need for ‘yield farming’ (crypto gambling to earn yield) may have learned in the environment of higher interest rates, “if you go back to access, a system that working with people has a lot of value”.
“Maybe not in its current form, but we will definitely see DeFi continue to grow. We will see new innovative applications coming out of this,” says Aoki.
“One of the most exciting things is token programmability. We just scratched the service about what smart contrast and programmability can bring. This will lead to some really cool innovations in the future.