Bitcoin’s growing adoption could impact how crypto-regulations are drafted
Cryptocurrencies still face significant challenges when it comes to adoption. While most countries today have devised regulations to support the crypto industry, there is a lot left to be desired from the overall crypto-adoption rates and use-case scenarios involving digital assets like Bitcoin.
In a recent interview, Dan Held, Director of Business Development at Kraken, spoke about Bitcoin adoption, claiming,
“All it takes is a few catalyst moments, a few critical individuals, and the price itself, as the price goes up, more people talk about it, which increases awareness, which increases more people buying into it. “
Events like the upcoming halving event may once again reiterate Bitcoin’s finite-amount narrative and highlight its scarcity which may, in turn, see more buyers driving the price upwards.
Since 2009, while Bitcoin’s price saw quite a few monumental ups and downs, one thing has remained quite steady – the active addresses. There has been a continuous increase in active addresses for Bitcoin, something that illustrates the fact that more people today have bought into the idea of Bitcoin and continue to trade BTC, even a decade after its arrival.
While Bitcoin has seen more mainstream recognition from the power corridors of Washington, Held believes that with a growing user base, regulations are also going to take into account the cryptocurrency’s popularity. Greater adoption in such a scenario automatically results in better regulatory and compliance infrastructure that will get rid of pockets of ambiguity that have deterred greater adoption and mainstream recognition. Held went on to say,
“If the government bans Bitcoin, they’re essentially damaging that percentage of the population that holds Bitcoin. So what happens when the hodler base is 25 to 30 percent of the country’s citizens? Are you really going to ban it and then have 30 percent of people not vote for you in the next election? It’s a really strong incentivization method because now people have skin in the game to vote and to guide policy to ensure that their bags are safe.”
In 2019, when Federal Reserve Chairman Jerome Powell called Bitcoin “speculative store of value,” it was also significant in terms of the recognition Bitcoin received from such a statement.
The fact that a former presidential candidate, Andrew Yang, and current presidential candidate, Michael Bloomberg, have spoken of crypto and digital assets is a testament to Held’s previous statement.
Held noted that for the longest time, Bitcoin advocates weren’t really taken seriously. He went on to speculate about what would happen when the user base for crypto grew around the world and how regulators would then respond to it. He said, “When Bitcoin does become 20 or 30% of the world’s population or the US population owns Bitcoin in the next bubble, now it becomes a real threat”
While Bitcoin’s increasing adoption from a wide spectrum of users may benefit the crypto-regulatory landscape immensely, many mainstream institutions are still skeptical about crypto in general.
A recent J.P. Morgan report had highlighted the fact that a lack of legal tender status may always constrain cryptocurrency liquidity, when compared to traditional portfolio hedges for many institutional investors.
With regard to crypto, the report’s insights were highly skeptical. With the upcoming halving event and if volatility levels were to go down, Bitcoin would then further cement itself as an investment tool in the eyes of lot more investors who have not yet gotten on board.