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NEW DELHI: In contrast to China’s authoritarian model, the US regulatory response to cryptocurrencies is likely to prove more accommodating given the rapidly deteriorating US-China relationship, according to Christopher Wood, global head of cryptocurrency. investment strategy. at Jefferies.
Despite China’s crackdown, the crucial question remained what will be the regulatory attitude towards crypto in the Western world, specifically America, Wood said.
U.S. Securities and Exchange Commission (SEC) Chairman Gary Gensler announced last month that the Commission would propose a regulatory framework for crypto next year, suggesting that Bitcoin may not be banned overnight. next day.
Greed and Fear, Wood’s weekly research note, assumes Gensler wants to come up with a definitive regulatory roadmap.
This would ultimately be very positive because bitcoin or other crypto assets can only truly realize their network potential, in terms of mass adoption, if they are part of the system, ”Wood said in Greed and Fear.
In the past fortnight, Chinese institutions have stepped up the crackdown on bitcoin mining after the People’s Bank of China (PBOC) reminded nations’ banks that they are prohibited from engaging in any activity related to cryptography.
According to the central bank of China, speculative trading in virtual currencies will disrupt the normal functioning of the economy and the financial market.
According to industry estimates, more than 90% of bitcoin mining has now been closed in China, which was once about a third of the processing power of global crypto networks.
According to Wood, this is a big deal since the message is that China doesn’t want its citizens to own crypto assets. Part of this is because of the obvious ability to use so-called stablecoins like Tether to bypass the closed capital account. It’s also, more importantly, because China doesn’t want any competition when it launches the digital renminbi nationwide, most likely in the fourth quarter of this year, ”Wood said.
The Chinese central bank’s (CBDC) digital currency is expected to give the government full transparency over the savings and spending habits of its citizens.
Certainly, the decentralized aspect of blockchain technology, so appealing to libertarians opposed to fiat currencies as state monopolies, is the complete antithesis of the Chinese collectivist system. The People’s Republic of China has understood this well. This is certainly a much bigger issue for Beijing than the carbon-generating aspects of bitcoin mining, ”Wood wrote.
Jefferies, who had included Bitcoin in his recommended portfolio for a US dollar-denominated pension fund in December priced at $ 22,779, maintained his 5% stake in the portfolio.
Thanks to institutional demand from companies like Tesla and MicroStrategy, Bitcoin hit a new high of $ 64,804.72 on April 14. However, due to concerns about the environmental impact of bitcoin mining and regulatory crackdown in China, the world’s largest cryptocurrency has fallen nearly 50% from its all-time high.
The digital asset was trading at $ 34,950, up 5.5% around 2:30 p.m. IST, according to CoinGecko.
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