Why Bitcoin Regulation Takes Us From Now To Next

(MENAFN- ValueWalk)


stux / Pixabay

EVP, Financial Services, Dave Donovan, on why cryptocurrency , and bitcoin regulation will serve to benefit the financial services landscape and wider society both short and long term.

Get The Full Ray Dalio Series in PDF

Get the entire 10-part series on Ray Dalio in PDF. Save it to your desktop, read it on your tablet, or email to your colleagues

Q3 2021 hedge fund letters, conferences and more

Stone House Capital Partners returned 4.1% for September, bringing its year-to-date return to 72% net. The S & P 500 is up 14.3% for the first nine months of the year. Q3 2021 hedge fund letters, conferences and more Stone House follows a value-based, long-long term and concentrated investment approach focusing on companies rather than the market Read More

• 1. Bitcoin Regulation Is A Long Term Win For Everyone
• 2. Stable Coins Backed By Treasuries Must Lead The Way
• 3. Decentralized, Democratized Banking Frees People To Transact More
• 4. Moving Money Should Be Free

Right now Bitcoin is volatile because it's not being regulated, which scares away various institutions that could stand to benefit from using Bitcoin for a plethora of reasons (i.e stocks, collateral, etc.) Overall, increased regulation of cryptocurrencies, and specifically, bitcoin will benefit everyone.

You could use smart regulation to help users and institutions safeguard their wealth. Doing so will increase stability while driving up the value and price of Bitcoin in the long term. The formula is simple, greater investor protection makes for greater confidence which begets a larger user base, thus driving up Bitcoin demand and ultimately price. This potential sequence of events precipitates an environment that encourages larger institutions to get off the sidelines and join the existing Bitcoin user base due to increased certainty in investor protections.

But that's not all larger institutions need. They will also require greater transparency to trust not only Bitcoin, but the activities and transactions underpinned by Bitcoin such as borrowing, lending, custody, and everything else we currently do with dollars which have serial numbers.

Stable Coins, or currencies that derive their value from an external source such as legal tender, a commodity , or other collateral, are a form of cryptocurrency. In theory, Stable Coins backed by treasuries potentially offer the best of both worlds, with the blockchain underpinning speed, cost efficiency, and transparency, while the treasury backing offers the stability needed.

Well-documented and transparent exposure can ease current anxieties around Stable Coin cryptocurrencies. These assurances are necessary and preferable to stable coins backed by commercial institutions, which are subject to the effects of a liquidity event due to Stable Coins only being as valuable as the collateral that values them. This relationship could create demand for the wrong reasons which, again, points to regulation as a stabilizing solution. Another clear way to guard against system risk would be to agree on a global Bitcoin standard.

We understand Bitcoin as a store of value, and blockchain as the system which underpins that store of value. To unlock a greater user base, Bitcoin should continue to appeal to the unbanked and underbanked, as Bitcoin can democratize global banking. This occurs because blockchain is a middle man eliminator across industries, all you need is an internet connection and a phone to get in the game.

Functionally speaking, it's almost as if the internet didn't happen for the financial services industry twenty years ago. We digitized the functions but didn't digitize the protocols themselves. We had clean and clear interfaces underpinned by the same old ACH payment rails which take 3-4 days to clear and cost a fortune in fees. The bottom line is that moving money should be free and easy. The real magic in Bitcoin and new financial systems is the lives that will change. Think of all the gig workers, landscapers, dishwashers, warehouse workers, and immigrants who came to this country and do the jobs which underpin our enjoyable way of life.

Why should we be taking away money that they're trying to send back to their families abroad? Why do we hit those living check-to-check with overdraft fees due to ACH rail hold-up? Why can't we front them with the money they've shown us they have and will continue to have? For the sake of economic certainty, and with the blockchain-enabled protocol solutions we have available, these hold-ups and fees should no longer be tolerated. Newer systems exist that allow us to move money more cost-effectively and with greater speed. Regulation is key to those systems taking root. Through blockchains protocol transparency, increased user confidence, mainstream adoption, the democratization of global finance will stimulate increased commerce. Regulating Bitcoin and other cryptocurrencies will bridge us from now to next.

Updated on Oct 27, 2021, 4:17 pm

MENAFN27102021005205011743ID1103060500

Legal Disclaimer:
MENAFN provides the information “as is” without warranty of any kind. We do not accept any responsibility or liability for the accuracy, content, images, videos, licenses, completeness, legality, or reliability of the information contained in this article. If you have any complaints or copyright issues related to this article, kindly contact the provider above.