Why Kevin O’Leary Thinks You Have To Be ‘Bullish’ To Want Crypto Regulation

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Why Kevin O’Leary Thinks You Have To Be ‘Bullish’ To Want Crypto Regulation

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Kevin O’Learya.k.a shark tank“Mr. Wonderful” has been a crypto champion for quite some time. So much so that he even gave his nickname to a crypto app called WonderFi. O’Leary even thinks that crypto could become the 12th sector of the economy. But there’s a big if: He thinks the industry needs regulation if it’s to realize its potential.

This view puts the successful entrepreneur at odds with many in the crypto world who argue that regulation would cripple crypto. Bitcoin (BTC) was designed to be the world’s first decentralized digital currency. It works without any intermediaries, and the idea is that it offers a monetary system that does not need the intervention of central banks and governments. As a result, some crypto enthusiasts believe the regulation goes against the whole ethos of Bitcoin.

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Why Kevin O’Leary is optimistic about regulation

The increase in regulation in Canada is actually what has made O’Leary changes his mind about cryptography. Compliance and sustainability are important to him, so when Canada approved its first crypto exchange license, it was a game changer. He could invest in crypto without being a cowboy. O’Leary believes he is not alone and that many investors who want to play by the rules will get involved when tougher regulations are passed.

The chairman of O’Shares Investments believes that low transaction costs, speed and transparency make crypto much better than what is available today. But the lack of regulation is a huge obstacle, especially when it comes to attracting institutional investors. According to O’Leary, institutional money is currently on the sidelines as compliance departments will not approve large crypto investments.

O’Leary told the Without bank podcast that regulation could bring a trillion dollars to the industry overnight. He says the majority of private equity funds do not currently hold crypto because there is no clear policy. But he argues they would get involved if the authorities introduced clear rules. And that wouldn’t just help crypto prices, O’Leary thinks it would also mean less volatility and more liquidity. All of this is why Mr. Wonderful recently tweeted, “You have to be optimistic if you believe in crypto regulation.”

In particular, he would like to see regulations in stablecoins, because that would be a big win for the industry. This could involve regular audits to ensure stablecoins have the reserves they say they have, and could even pave the way for stablecoin gains. FDIC insurance. Once stablecoins are regulated, he believes governments can then shift their attention to other areas of the industry.

What’s going on with crypto regulation?

When the total crypto market capitalization inflated to nearly $3 trillion last year, governments around the world really started to take notice. That figure has now fallen to around $1 trillion. Nevertheless, authorities are concerned about a host of factors, including the risk of money laundering, the impact on the wider economy and the lack of investor protection.

There are currently various proposals and discussions underway, both in the United States and abroad. President Biden issued an executive order on crypto in March, asking various organizations to contribute reports and proposals. These answers are coming in, and it’s a mixed bag. For example, according to Washington PostTreasury to warn White House that crypto could pose significant financial risks, while another report raises questions about the environmental impact of cryptographyespecially bitcoin.

There are a lot of campaigns and a lot of interdepartmental scrambles for power. On the positive side, it seems extremely unlikely that the United States will follow China and ban crypto altogether. Either way, whether O’Leary is right to be optimistic about regulation depends a lot on the nature of that regulation. Authorities will need to distinguish between protecting consumers and stifling innovation.

At the end of the line

Like many things in the crypto world, there is no telling what will happen next. In the long term, O’Leary argues for increased regulation and its potential to open the doors to billions, if not trillions of dollars in institutional investment. This is one of the reasons many crypto industry insiders want to see more regulatory clarity.

However, in the short term, the regulations are likely to generate new headwinds for the struggling crypto industry. For example, we don’t know what impact stablecoin regulations would have on Tether (USDT), the third-largest crypto by market capitalization. If Tether falters, it will rock the crypto world. Similarly, if authorities decided to categorize major cryptos as securities, it would have a big impact on how they were managed and traded.

Increased regulation of crypto is now inevitable. When it does occur, it is likely to have a significant short and long term impact. It could, as O’Leary believes, transform the market by opening the doors to more than a trillion dollars in investments. But it could also change the way crypto exchanges work, and what assets crypto investors can access. For now, the only thing we know for sure is that change is coming.

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We are firm believers in the Golden Rule, which is why editorial opinions are our own and have not been previously reviewed, approved or endorsed by the advertisers included. The Ascent does not cover all offers on the market. The editorial content of The Ascent is separate from the editorial content of The Motley Fool and is created by a different team of analysts.Emma Newbery has positions in Bitcoin. The Motley Fool has positions and recommends Bitcoin. The Motley Fool has a disclosure policy.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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