Bitcoin might have taken the financial world by surprise. But regulatory squeamishness ensures that it is still far away from gaining mainstream adoption on Wall Street, according to Terry Duffy.
The CME Group chairman and CEO told Business Insider that the biggest thing that is keeping governments away from bitcoin is its finite supply. The cryptocurrency’s supply cap does not fit well with modern economic theories, which allow governments to print money at will. With bitcoin providing no such control, Duffy said governments would be unlikely to ever use it themselves.
“The governments can’t run unless they can run on a deficit,” he explained. “I am trying to figure out why they would say, ”Sounds good to me because I want to be responsible and run everything on [an] even-for-even basis. I can’t borrow against anything.”
Duffy added that the only way through which bitcoin can gain adoption on Wall Street is regulatory approval. But they have so far kept cryptocurrencies in the distance as they continue to raise doubts about them.
The Securities and Exchange Commission (SEC), for instance, has rejected applications of several bitcoin exchange-traded funds over the years. The securities regulator fears potential price manipulation in a mostly unregulated bitcoin spot market.
Atop that, there are worries about the real-world use cases of cryptocurrencies. A majority of the participants within the cryptocurrency community are speculators, not users.
“Once you get the use of it, the price will take care of itself,” Duffy said. “But the argument has gone only to the price of, say, bitcoin or any other cryptocurrency. No one is talking about, ‘How do I use this asset?'”
According to Duffy, stablecoins – like the one Facebook is secretly working on – are a better fit for everybody, whether it is governments, regulators, or significant financial players. Only currencies backed by stable fiat assets like the dollar or euro could allow these organizations to enjoy a cryptocurrency without inheriting its risks, he concluded.