Piyush Gupta, chief executive of DBS Holdings Group Ltd, released the bank's annual report on Wednesday, giving his thoughts on blockchain payments. In particular, he reiterated the growing trend of interest in bitcoin and other tokens as a safe haven.
Nevertheless, he believes that it is unlikely that cryptocurrencies will take on the role of fiat money.
"Regulators and politicians will be reluctant to give up control of monetary policy and economic management tools, and will therefore be very cautious about letting private money grow. Having said this, I do think that private money (crypto) will continue to grow as a meaningful store of value, much like gold is today," Gupta added.
It is easy to understand, since today only the state is the monopolist in the area of issuing and controlling the turnover of payment instruments. And it will not give up its role so easily.
In addition, illegal operations too often benefit from the uncontrolled circulation of cryptocurrencies.
Moreover, Gupta said central bank digital currencies (CBDCs) will become more common and there's a need to stay close to these developments. Since 85% of central banks in the world are either currently studying or piloting it, the direction of travel seems clear. DBS is participating in industry sandboxes and experimenting with the central bank digital currency in association with the Monetary Authority of Singapore, Gupta added.
The words of the chief executive of one of Singapore's biggest banks are all the more weighty given the macroeconomic situation.
A great example of how people are escaping into the digital money segment is Argentina: the country's economic instability is fuelling one of the biggest digital money booms in the world.
Sports stadiums, buses and highway billboards across Argentina are plastered with adverts for cryptocurrency exchanges, taking advantage of the lack of strict regulation of cryptocurrency advertising like the UK.
TV and radio hosts talk about investment options in digital coins, and a crypto exchange is currently one of the sponsors of the nation's biggest soccer cup.
Workers are increasingly getting paid in cryptocurrency to circumvent exchange controls and to protect them from currency swings and 50% inflation.
According to Deel, a payroll accounting company that operates in 150 countries, Argentina has a higher proportion of employees paid in cryptocurrency than anywhere else in the world.
Driving the trend is a local law that allows companies to pay as much as 20% of renumeration in kind. This is what businesses take advantage of, interpreting the concept of "in kind" rather loosely.
This is a huge advantage for employees because of Argentina's currency controls.
If a company were to pay $1,000 through the banking system, the employee would receive about 109,000 pesos, at the official exchange rate. However, if the worker instead got paid in a cryptocurrency, that could be changed at the unregulated parallel exchange rate for about 200,000 pesos - 83% more.
Of course, this favourable rate makes companies increasingly turn to this method of settlement, while avoiding taxes, at least in some cases.
Some companies also break the rules by exceeding the 20% limit on in-kind wages, according to Andres Ondarra, manager of Bitso, a cryptocurrency exchange with 4 million users in the region.
"Crypto sweetens local wages," Matias Dajcz, Global VP OTC at Ripio, a Latin American company that offers services to companies that pay in cryptocurrency, said.
In particular, tech companies pay part of their wages in so-called stablecoins, pegged to the dollar, as well as in other cryptocurrencies such as Bitcoin and Ethereum. Prices of many such coins have dived in recent months, with Bitcoin down about 40% from its November peak, inflicting heavy losses on Argentines who held them instead of converting them into pesos.
The number of companies paying salaries in digital currency has soared by 340% over the last 12 months, according to Buenbit, an Argentine crypto exchange with 600,000 users.
Argentina's central bank is unhappy with the trend. Although it has yet to take clear action, has already warned Argentines that their savings in cryptocurrencies are vulnerable to cyberattacks and are not protected by deposit insurance.
As part of its agreement signed with the International Monetary Fund this month, Argentina undertook to "discourage the use of crypto-currencies with a view to preventing money laundering, informality and disintermediation". However, there are as yet no functional instruments for this.
Cryptocurrencies are also easier to convert into assets in safer jurisdictions overseas, while workers can also get their money more quickly, rather than having to wait days for transfers to clear.
Small and medium businesses are driving the adoption of digital currency. German Gimenez, founder of Komuny, an education startup with fewer than 50 employees in Mendoza province, said his company pays the majority of staff in cryptocurrency.
"We seek the economic independence of every person," Gimenez, who says the company received good feedback from employees, announced.
BitPay, a company that offers crypto payment services to employees in the US, says that some North American workers are paid entirely in crypto, which is less common in Argentina. In the US, payments tend to be in Bitcoin, Ethereum and Dogecoin rather than in stablecoins. BitPay says its clients are mostly companies with fewer than a thousand employees, and others with contractors globally.
"We have companies that have affiliates all over the world and instead of dealing with different fiats, they do this," Merrick Theobald, VP of Marketing at BitPay, said. "It doesn't cost a lot of money to offer this service."
Clearly, the role of bitcoin and other cryptocurrencies in payments is growing. And the sooner governments recognise this fact, the sooner cryptocurrencies will become more regulated and secure. In particular, it has become known that Joe Biden is about to sign an executive order that aims to explore the possibilities of integrating cryptocurrencies into the economy.