Cryptocurrency is being embraced by the Davos set, and some Bitcoin fans are excited.
The World Economic Forum said on Friday that it is putting together a consortium made up of public and private-sector leaders to write guidelines for cryptocurrency governance. The announcement was light on specifics, but it signified that the people who keep watch over the traditional banking system—central bankers, in particular—are willing to be associated with digital assets, and even promote them.
Entrepreneurs in the industry have expressed frustration about how widely governance standards for cryptocurrencies vary throughout the world. The consortium will try to bring order to this “fragmented regulatory system,” the announcement said.
The price of Bitcoin rose after the announcement, which came just after noon Central European Time, or 6 a.m. Eastern Time. Bitcoin rose to about $8,400 from about $8,200 over the next hour. It was trading at $8,455 in early afternoon in New York.
While cryptocurrency’s initial appeal was that it operated outside the world’s ordinary financial infrastructure—in a rebuke to the economic and political systems—many investors think that its price is dependent on it being accepted more widely, including by the gatekeepers of those systems.
Bill Miller, a famous value investor who bought the digital currency before it surged in 2017, has said that Bitcoin has been on a “march to respectability” that should gradually benefit its price. On Friday, he told Barron’s that the Davos announcement is part of this process.
“This announcement is a further indication that the economic elites are no longer ignoring the innovation behind cryptocurrencies and blockchain technology,” said Mark Williams, a Boston University professor who teaches about fintech.
It’s important to note that digital currency today encompasses a lot more than Bitcoin and other decentralized coins. The term also refers to currencies being developed by central banks themselves, as well as ones expected to be governed by corporations, such as
(ticker: FB) Libra.
David Marcus, head of the Libra project, was one of the people quoted in the announcement about the consortium. His quote wasn’t particularly illuminating—he said “we welcome the dialogue”—but it is incrementally positive for both the project and cryptocurrencies in general that Libra was mentioned.
The currency has faced major pushback from government leaders in the U.S. and elsewhere. It isn’t clear if Marcus or another Facebook representative will be part of the consortium.
Government leaders had previously seen cryptocurrencies mainly as a way for criminals and political dissidents to move money around the world without being detected. Friday’s news shows that leaders now see these currencies as tools for financial inclusion. Poor people without money in a bank could use them to transact without paying high fees.
Write to Avi Salzman at firstname.lastname@example.org