The head of global equity strategy at Jefferies, an investment bank and asset management company, says cryptocurrency regulation in the United States would be “ultimately very positive” for bitcoin or d ‘other crypto assets. It will also be more accommodating than China’s authoritarian approach to crypto regulation.
US regulations would be “ultimately very positive” for mass adoption of Bitcoin and cryptocurrencies
Christopher Wood, head of global equity strategy at Jefferies, discussed cryptocurrency regulation in his latest weekly research note, Greed & Fear.
Jefferies is a diversified financial services firm engaged in investment banking and capital markets, asset management and direct investing. The company claims to be “the largest independent, global, full-service investment bank headquartered in the United States,” according to its website.
Wood reportedly said the regulatory response to cryptocurrency in the United States would likely be more accommodating than “China’s authoritarian model” given the rapidly deteriorating U.S.-China relationship.
He expects the US Securities and Exchange Commission (SEC) to come up with a definitive regulatory roadmap, citing new SEC chairman Gary Gensler, who is pushing for a regulatory framework on cryptocurrencies. . Gensler has repeatedly said that crypto exchanges need more regulation, asking Congress for a vote. Wood said:
This would ultimately be very positive since bitcoin or other crypto assets can only truly realize their network potential, in terms of mass adoption, if they are part of the system.
Recently, China cracked down on bitcoin mining, and the People’s Bank of China (PBOC) reminded banks in the country that they are prohibited from engaging in any crypto-related activity. According to industry estimates, more than 90% of China’s bitcoin mining capacity has been shut down.
Wood explained that China does not want its citizens to own cryptocurrencies, elaborating:
Part of the reason for this is the obvious ability to use so-called stablecoins as fasteners 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.
China is actively working on a central bank digital currency (CBDC) and has tested the digital yuan in various cities. More than 3,000 ATMs in Beijing now offer digital withdrawals in yuan. Some analysts believe that China’s absolute control over its state-backed digital currency will boost demand for cryptocurrencies.
Wood detailed, “Certainly the decentralized aspect of blockchain technology, which is 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. “
Jefferies reduced its gold exposure in favor of bitcoin in December of last year in its recommended portfolio for U.S. dollar-denominated pension funds. “The 50% weighting of physical gold bullion in the portfolio will be reduced for the first time in several years by five percentage points with the money invested in bitcoin,” Wood explained at the time. The company maintained a 5% stake in BTC in the portfolio.
The SEC and CFTC recently cautioned investors against funds investing in Bitcoin futures. While Gensler has pushed for cryptocurrency regulation to protect investors, the SEC has left bitcoin and cryptocurrency out of its regulatory agenda this year.
Do you agree with Chris Wood on bitcoin and crypto regulation? Let us know in the comments section below.
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