30th Parliamentary Intelligence-Security Forum – The Geopolitical Impact of Crypto and Digital Currencies
Hon. Oonagh McDonald delivered a concise yet substantive analysis on the economic and regulatory implications of Bitcoin, stablecoins, and emerging digital currencies. She explained that Bitcoin’s extreme price volatility, driven purely by market sentiment rather than intrinsic value, makes it unsuitable as a reliable store of value or medium for long-term savings. This instability—shared with assets like gold—led directly to the creation of stablecoins, which are designed to maintain value by being pegged to traditional currencies, particularly the U.S. dollar, which underpins approximately 99% of all stablecoins.
She emphasized that the stability of both fiat currencies and their pegged digital equivalents ultimately rests on the strength, governance, and economic performance of the issuing nation—not merely on the “full faith and credit” promise but on real economic fundamentals.
Dr. McDonald highlighted the opaque nature of some stablecoin issuers, especially privately held companies like Tether, which historically were not required to publish audited financial statements. She welcomed El Salvador’s requirement for independent audited reports, noting such measures are essential to ensure these entities truly hold the dollar reserves they claim, particularly as stablecoins now facilitate up to 70% of international trade in Latin America.
She also warned about the growing prevalence of fraud and criminal exploitation, including sophisticated cyber-thefts, pig-butchering scams targeting individuals, and large-scale hacks perpetrated by hostile states such as North Korea—responsible for an estimated $1.5 billion heist this year.
Finally, she urged strong caution regarding Central Bank Digital Currencies (CBDCs). While technologically efficient, CBDCs carry severe risks of governmental overreach, surveillance, and potential misuse—similar to how China employs its digital currency to monitor and punish citizens. Even democratic governments, she warned, may eventually find such tools “too tempting” to resist. She concluded by calling for robust regulation, vigilant enforcement, and enhanced training to track illicit transactions, ensuring digital assets support economic development without enabling criminal activities or undermining individual freedoms.
