In a recent interview, Robin Vince, CEO of Bank of New York Mellon, has emphasized on the dominant position of the US dollar despite increase in use of cryptocurrencies. Bank of New York Mellon is the oldest bank in the US.
During an interview with Yahoo Media, Vince commented that digital assets are still new and will not pose a threat to the dominance of the dollar anytime soon.
Dollar’s Resilience Amid Crypto Growth
U.S. Dollar Index (DXY) remains a key indicator of how strong the dollar is against a group of major global currencies. The index is primarily influenced by the euro, which carries a 57.6% weight, followed by the Japanese yen at 13.6% and the British pound at 11.9%.
Other currencies factoring into the index include the Canadian dollar (9.1%), Swedish krona (4.2%), and Swiss franc (3.6%).
U.S. Dollar Index (DXY) Source: trading view
Even as cryptocurrencies continue to gain popularity, recent data shows that the dollar remains strong. The two largest cryptocurrencies, Bitcoin and Ethereum, recorded a significant outflow the previous week.
CoinShares reported that digital asset investment products witnessed an outflow of US$305 million while Bitcoin had an outflow of US$319 million. However, short Bitcoin investment products received inflows of US$4. 4 million for the second week in a row which indicates that the investors have gone into a bearish mode.
Digital Assets and Blockchain Technology
Vince recognized the potential of blockchain which is the basis of most cryptocurrencies. He emphasized the fact that blockchain technology gives a chance to create new developments within the financial sector.
The use of digital ledgers to capture assets could enhance the efficiency of financial activities and bring about new innovations. Cryptocurrencies are still unregulated and prone to fluctuations, which is why they cannot be considered as a substitute for traditional money yet.
He also stated that it was not going to affect the traditional currency in any way. He said,
“Whether or not an individual wants to put all their money in a particular coin is a slightly different thing I don’t think that dollar is going to go anywhere I think the way that we treat and make the dollar work efficiently the world’s financial system is going to evolve.”
However, the outflows from Ethereum investment products in recent days show that the future of digital assets is not guaranteed. According to CoinShares, Ethereum experienced outflows totaling US$5.7 million last week, with trading volumes plummeting to just 15%.
Vince’s comments also touched on the regulatory environment surrounding cryptocurrencies, emphasizing the need for clear guidelines. Vince argued that regulatory clarity is essential for the sustainable growth of digital assets and their integration into the broader financial system.
Without proper regulation, he warned, the volatility and risks associated with cryptocurrencies could undermine their potential. As seen in the recent regulation battle between Ripple and SEC.
Brad Garlinghouse, CEO of Ripple once complained that crypto lacks clear regulations and requested clear guidelines in their legal battle with the commission. In addition to what Vince discussed, there’s no doubt that the crypto market has faced several hacking incidents.
Crypto Alert agents are often reporting exploits wherein crypto exchanges lose a huge amount of funds. For instance, Wazirx, an Indian crypto exchange, lost around $235M. On Sep 3 Yield protocol Penpie lost $27 million.
The vulnerability to security risks is among the major concerns ailing the crypto industry today.
