Blockchain
Cryptocurrencies have gone mainstream and investors should take note.
Cryptocurrencies are mainstream and policy makers are taking notice
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With the Republican Party solidifying its ticket for the presidential race with the addition of J.D. Vance, there is yet another pro-crypto politician aiming for the White House in 2024. In addition to another pro-crypto individual entering the race, the SEC is inching ever closer to authorizing spot ether ETF products, which would represent another large-scale shift in the cryptocurrency landscape in 2024. Underscoring this pivot and shift in attitude are recent comments from the head of Blackrock Larry Finkwho commented that his previous statements about bitcoin were incorrect and that bitcoin provides important diversification for asset managers. In particular, it also appears that the real world resource tokenization – which Blackrock has done bold predictions approximately – is outperforming other cryptocurrencies in 2024 so far.
With this wave of positive momentum and sentiment, it would seem that crypto investors and supporters can rest assured that the cryptocurrency market is in good hands. As tempting as it may seem, however, it is always important to have reasonable expectations, realistic plans, and logical methods to achieve those desired outcomes. As cryptocurrencies continue to rise in prominence on both sides and look set to be at least part of the conversation as the race for the White House heats up, what are some wish list items that should be kept in mind?
Stablecoin Policy
A long-awaited and much-discussed goal in the cryptocurrency community has been some sort of comprehensive policy or legislation regarding stablecoinswhich makes sense from a number of perspectives. First, stablecoins provide easier to understand access via lower volatility and connections to TradFi assets, for individuals and institutions looking to gain exposure to cryptoassets, compared to other options. Second, TradFi companies have been quick to adopt stablecoins, with several companies issuing native stablecoins. Finally, this is an area that also makes sense from a banking perspective, given the implications of stablecoin transactions.
Given that the US dollar is being challenged in its role as a global reserve currency by numerous nations, that tokenized transactions are cheaper and faster than existing options, and that the vast majority stablecoins are backed on a 1:1 basis by the US dollar stablecoin policy makes sense from every perspective. Establishing a solid policy in this space would be beneficial for all investors and supporters of the space.
Bitcoin Policy
One wish list item that may be less possible in the short term is the establishment of a U.S. strategic bitcoin policy. With nations like El Salvador Having a head start in this area for several years and deciding to physically store the private keys to state-owned bitcoin holdings within the nation’s borders, there is precedent for the United States to develop and implement similar policies. Similar to how private companies diversify asset holdings, establishing and maintaining diverse revenue streams, and allocating funds for future possibilities, nation states have similar responsibilities.
With supporters Like Senator Lummis (R-WY), the potential for — if not a strategic bitcoin reserve — at least a strategic bitcoin policy is something that should be on every cryptocurrency advocate and investor’s wish list. Even the process of having the conversations and making the investments necessary to enact such a reserve or policy would accelerate broader policy discussions about cryptocurrencies, tokenization, and the digitization of financial services.
Bitcoin may not have succeeded as the global reserve currency of the future, but it still has an important role to play in how cryptocurrency policy and investment moves forward.
Renewable Energy and Cryptocurrency Policy
Labeling this item as a bucket list item might seem like an interesting choice since it combines two of the most hotly debated topics, bitcoin and renewable energy, into one option. Putting aside some of the rhetoric reveals that these two concepts are not as far apart as they might initially seem and can actually help each other grow. Renewable energy or non-fossil fuel sources are already a policy priority in the United States and seem unlikely to change anytime soon. Even short-term divestments or new investments in fossil fuel production seem closer to short-term events than major policy changes.
Cryptocurrencies, but especially bitcoin, have a proven track record not only using non-fossil fuels energy resources and as a grid management tool during periods of higher-than-expected demand. As electricity demand continues to increase, driven by a variety of different industries and business applications using artificial intelligencethe focus on real-time, responsible, and effective network management will only become a greater priority. Since crypto operations already tend to be green, it makes political sense to see how these two areas can work together.
Cryptocurrencies are coming to Washington in a big way, potentially setting the stage for some of these wishes to become reality.