In a recent letter published to the investors on behalf of the United States-based cryptocurrency index fund provider Bitwise, stated that Facebook’s Libra has fast-forwarded crypto adoption to 2-3 years, a lot sooner than expected. Facebook’s Libra has garnered a significant amount of attention from the U.S. lawmakers after its announcement.
Congress hearings have been going on to categorize the digital asset so that better regulatory requirements can be placed on it to avoid illicit usage and to keep a check on Facebook.
This attention gained by Facebook’s cryptocurrency in the media and in the regulatory arena has just proved cryptos authority. With Libra bringing in regulator’s attention towards crypto, it has done this nascent space some good as this will help clarify the regulatory stance of the broader crypto world.
In the letter, company’s global head of research, Matt Hougan stated:
In sum, the best way to think about what happened over the past month is to view it as a catalyst for the asset class’ timeline. Thanks to Facebook’s Libra and Congress, we have just fast-forwarded two or three years into crypto’s future, accelerating all the conversations, debates, and mainstream discussions into the present day.
Regulation has been largely missing when it comes to just a decade-old world of cryptocurrencies. Bitcoin and other cryptos are technological innovations that have sprung up in the past 10 years only. Cryptocurrencies provided the world an alternate online global financial system, other than banks.
Being a technological innovation, the lack of concrete laws around the workflow of this space has allowed for illicit activities such as money laundering, investment scams and much more to seep into it. With regulatory clarity largely missing, major corporations and institutions have stayed away from this uncertain and volatile space. With Libra’s announcement, the entire landscape has changed.
Facebook is keen on launching its global digital currency and since it has over 2.7 billion user base, the ramifications of this on global finance are expected to be huge. In order to make sure the company’s activity stay true to regulatory restrictions and avoid all illegal usage, Congress recently stepped in and held hearings with company’s representatives in order to understand how it is going to work. After all, it is not easy for the lawmakers to hand over a global financial network to a single “company” alone. Congress is now trying to bring in Libra under a solid regulatory umbrella to avoid illicit activities.
By bringing the attention of lawmakers to the world of cryptocurrencies, Libra has opened up discussions about regulation of other major cryptos as well, such as bitcoin. The lawmakers have also shifted their focus to the broader crypto world besides Libra for imposing regulations. Recently, the U.S. Senate Banking Committee held a hearing on cryptocurrencies including crypto personalities such as the Circle CEO Jeremy Allaire.
This has just propelled the progress being made by cryptos on the regulatory end. Although too much regulation and scrutiny might halt the innovation in this burgeoning world but in the long-term, regulation is expected to improve the general adoption and integration of cryptocurrencies globally. Matt also said:
But even this scrutiny and attention will be good for crypto long term. It will give investors the assurance that regulators are involved and will clarify the guidelines under which the mature version of crypto can develop.
As regulation seeps into the crypto world, the institutional investment which is largely sitting on the sideline until now, is expected to flow into it as well. This might take the price of bitcoin and other cryptocurrencies to levels never been seen before.
Adoption on the corporate end and safe usage of crypto in the real-world will draw in general public towards this space and hence the expected increase in price due to simple supply and demand. All in all, bringing regulation as fast as possible into this space is better for cryptos long-term growth and Facebook’s Libra has just put a nitro-boost in this supercar of cryptocurrencies when it comes to regulatory clarity.