Treat digital currencies like vitamins, not as a ‘‘pain’’
There are far reaching benefits for market players who can harness the efficiencies created by Fintech business models that are emerging in this latest wave of disruption but the regulators need to keep up.
Dr. Nushad Perera, Group Chief Digital Services Officer Dialog Axiata PLC, recently said that the next wave of disruption is Fintech (which is essentially the application of technology to the provision of financial services). “Every bank has realised this in 2019. The main spur is that there is millions in the unbanked or under-banked population in Sri Lanka. However they all own a mobile phone,” he said noting that most people use their bank account to just receive their salary and pull it out completely the next day. He was speaking at a roundtable organised by the global publishing, research and advisory firm Oxford Business Group in Colombo on Tuesday.
“This country has just about 1 million current and savings accounts which means there is so much of currency out there that doesn’t pass through a banking system. That’s where digital currencies like eZcash and mCash come in. They spur the under-banked and unbanked into a digital wallet. Unfortunately regulators treat us like we are a pain – and they dispense pain killers by stifling this digital growth with wallet limitations and transaction size limitations and KYC (know your customer) requirements,” he explained.
On the sidelines of this discussion, he elaborated to the Business Times that regulators are comprehending digitisation in a different way, and at a different pace of policy engagement. Analysts say that while it is not an easy task to determine how new business models like e-payments or digital currencies fit into existing laws, it is often necessary that the regulator, both understand existing licensing requirements but also to embrace different aspects of new business models.
Dr. Perera further elaborated, that when a currency comes into a digital environment it leaves some digital footprint which is traceable. “If it’s in the form of real cash, it’s not traceable. Regulators and the Central Bank fail to understand this. They should instead give us vitamins and invest in growing the digital currencies.”