What You Need to Know
- “It’s not a matter of if but when,” he said.
- Edelman also said China's crackdowns on cryptocurrency mining is good news for the U.S., where mining can migrate.
- Stablecoins are an obvious opportunity for regulation, he said.
Despite an almost 50% decline in the value of Bitcoin between mid-April and late June and crackdowns in the U.K. and China, Ric Edelman, the founder of Edelman Financial Engines and the RIA Digital Assets Council, remains bullish about cryptocurrencies. He also expects the Securities and Exchange Commission to approve a Bitcoin ETF.
“It’s not a matter of if but when,” said Edelman, who hosted a recent webinar with guest Ben McMillan, the founder and chief investment officer of IDX Digital Assets.
About a dozen asset managers have application filings pending at the SEC to launch a Bitcoin ETF. The agency has rejected some such filings in the past and more recently has postponed decisions on about a handful, including the VanEck Bitcoin Trust for which the SEC has delayed a decision twice.
SEC Chairman Gary Gensler has said greater investor protection is needed for the cryptocurrency market, which he calls a “speculative asset class,” but the SEC lacks the authority to regulate cryptocurrency exchanges.
Edelman is unfazed by the SEC’s delays and even put a positive face on the U.K. Financial Conduct Authority banning the U.K. operations of Binance, the world’s largest cryptocurrency exchange, and China’s recent crackdown on crypto mining, which was the catalyst for the recent Bitcoin selloff, according to McMillan.
“China’s move to ban mining is a bullish signal for the U.S. and Bitcoin,” said Edelman. “Miners will be coming to the U.S. [which will] introduce new opportunities for regulators to get engaged. This is a competitive environment. The Chinese are taking themselves out of the market, though likely to change their minds again.”
The Chinese move “highlights the geopolitical nature of crypto,” McMillan said.
In the U.S., regulators are looking at the vulnerabilities of crypto exchanges, said Edelman, adding he “wouldn’t be surprised to see limits on leverage on U.S.-based exchanges.” In China and in Binance’s U.K. operations, leverage could be excessive, according to McMillan.