The world’s largest cryptocurrency could soon face scrutiny, as governments may be looking to impose restrictions on the decentralized currency similar to the way gold was outlawed in 1934, says the founder of the largest hedge fund in the world.
According to the Ray Dalio, founder of Bridgewater Associates, bitcoin could face similar consequences like gold did in the US over ninety years ago. ″Back in the ’30s in the war years … because cash and bonds were such bad investments relative to other things, there was the movement to those other things, and then the government outlawed them,” he told Yahoo Finance. “That’s why also outlawing bitcoin is a good probability,” he explained.
Dalio was referring to a controversial act signed by President Franklin D. Roosevelt in 1934, that put an end to private use and ownership of gold as a currency. The act also created the exchange stabilization fund as a means of stabilizing the US dollar once the government eliminated the gold standard. Every country treasures its monopoly on controlling the supply and demand. They don’t want other monies to be operating or competing, because things can get out of control,” he continued.
Citing an example, Dalio pointed to India and its proposed law on banning cryptocurrencies, which, if materialized, would criminalize the possession and use of bitcoin. However, it remains unclear if such a law could come to fruition in the US. Although Fed Chair Jerome Powell has not mentioned banning unregulated cryptocurrencies, he has issued stark warnings against their use.
“They’re highly volatile and therefore not really useful stores of value and they’re not backed by anything,” Powell said during a digital banking panel discussion on Monday. “It’s more a speculative asset that’s essentially a substitute for gold rather than for the dollar,” he argued.
Information for this briefing was found via Yahoo Finance. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.