Cryptocurrency has been touted by financial gurus and economists as the currency of the future since its inception, and as more countries continue making strides toward becoming cashless societies, they may be right.
People have described cryptocurrency as digital gold and have even speculated that its independence from centralised governments and central banks would revolutionise banking.
Leading currencies such as Bitcoin, Etherium and others have created an outlet for digital financing for several people and has proven, for many, to be a lucrative investment.
But as cryptocurrencies experience roller-coaster-like volatility many central banks, including in TT, have expressed concerns with it.
Central banks have flagged such issues as a risk for fraud and illicit financial activities, making governments apprehensive about buying into cryptocurrency.
Despite its concerns, the TT Central Bank has made strides in developing fiscal policies for cryptocurrencies and other forms of fintech with the support of the Securities Exchange Commission (SEC) and the Financial Intelligence Unit. Central Bank has also approved e-money issuers in the past couple years, which shows its cautious interest in cryptocurrency.
Still, cryptocurrency's speculative value structure, the shortcomings in vendors' ability to adhere to anti-money laundering (AML) and counter-financing of terrorism (CFT) policies have proven that for the moment it is still risky business.
Volatility a main concern
Cryptocurrency is a decentralised digital currency in which transactions are verified and records are maintained using cryptography rather than a centralised authority. This differs from Fiat currency which is a legal tender that is connected to a country's economy.
In TT, the Central Bank developed fintech policies aimed at promoting an environment for financial innovations such as cryptocurrency. The SEC also developed its own policies, with the intention to guide its approach to fintech.
[caption id="attachment_1010572" align="alignnone" width="797"] Central Bank TT is working on a cryptocurrency policy. -[/caption]
In September 2022, Pay Wise was registered as an approved e-money issuer. This year, in March, PESH Money Ltd was also registered as an e-money issuer. TSTT was also given a licence to issue e-money through it Paypr service.
The main difference between both currencies is that the issuance and governance of Fiat currency is regulated by governments through central banks, and cryptocurrencies are issued and governed by blockchain protocols, code and communities.
But, for central banks it continues to be very difficult to predict or determine its value.
Bitcoin, one of the first cryptocurrencies, began increasing in value from 2014, at about US$327 for one bitcoin. The value of that same bitcoin continued in an upward trajectory until it peaked in 2017 at US$19,650. It then fell again in to US$3,798 in 2019. In 2021 it sky-roc
