Top Fund Manager: Treasury’s New Crypto Rules Could Help Industry
Over the past few weeks, there’s been a growing concern amongst cryptocurrency investors of an impending crackdown on Bitcoin service providers.
This concern doesn’t come unwarranted; at the start of the year, European Union countries activated an anti-money laundering directive, which had a clause indicating that services providers working in the cryptocurrency space will be required to gather more information about transactors of digital assets.
Europe’s move to implement this directive has already hurt the cryptocurrency space, with industry companies like Simplecoin and Bottle Pay having to shut down their platforms. Many industry members were extremely disappointed by the closure of Bottle Pay, for it allowed people to easily transact Bitcoin through Twitter.
And more recently, Steven Mnuchin, the Secretary of the U.S. Treasury, said in a hearing held by the Senate Finance Committee that the FinCEN branch of the Treasury will soon roll out “significant new requirements” for entities working with cryptocurrency.
Mnuchin in the wake of Facebook’s reveal of Libra that cryptocurrencies are a national security threat, so this move (or hint of an impending move) was a long time coming.
Interestingly, a top industry investor has suggested that the integration of the “requirements” Mnuchin is warning of may actually help Bitcoin’s growth in the longer term.
How Bitcoin Could Benefit From the Impending Crypto Crackdown
Speaking with CNBC on Friday regarding Bitcoin and the broader cryptocurrency space, Mike Novogratz — incumbent CEO of Galaxy Digital and a former partner at Goldman Sachs — argued:
“We’re going to see something from Treasury in the next few months that kind of puts some guardrails around Bitcoin. I think that’s a positive.”
It isn’t only Novogratz who has suggested the implementation of more clear and stringent rules against cryptocurrency could actually end up helping Bitcoin.
Andrew Yang, a Democratic presidential candidate that just recently dropped out of the race due to a poor showing in two primaries, said in a January interview with Bloomberg that the implementation of clear regulations in the U.S. may spur innovation. Yang noted that the current inconsistencies in how crypto is regulated across the U.S., like the Bitlicense in New York and the pro-blockchain laws in Wyoming, is deterring startups from making certain decisions.
Bart Smith, dubbed “Wall Street’s Crypto King” by some media outlets for some reason, has echoed this line. He told CNBC that regulatory clarity should aid this space because it should help institutions enter the space, citing institutions’ traditional propensity to avoid risk at all costs.
There has also been some hearsay on social media platforms that the aforementioned European Union AML directive, which forced leading derivatives exchange Deribit to implement mandatory KYC for its customers and pushed the exchange to move its jurisdictions, may actually increase the volumes seen on the derivatives.
Upcoming Presidential Election May Alleviate Pressure
Whatever the sentiment is around Munichin’s incoming regulation, Tom Lee of Fundstrat Global Advisors has suggested the growing news cycle surrounding 2020’s U.S. presidential election could alleviate regulatory pressure on the space.
Lee did not elaborate on this point in recent interviews. Though, the alleviation he is referring to is likely that of the media, which would most likely rather focus on news of the presidential election than the nuances of crypto regulation.
The Fundstrat executive said that this factor, coupled with others like Bitcoin’s maturing into a digital store of value and the block rewards halving, will help BTC rally 100% in 2020 and will aid a long-term move to $40,000.
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OhNoCryptocurrency via https://www.ohnocrypto.com/ @Nick Chong, @Khareem Sudlow
