Balaji Srinivasan, a former partner at a16z and former CTO at Coinbase, has said that in the future, every nation state may have to hold crypto.
Srinivasan, who now operates as an angel investor, said:
“Ten years after the launch of Bitcoin, the President of the United States and the Chair of the Federal Reserve are both discussing it on the same day. The tone almost doesn’t matter. Ten years hence, this will be routine. Every nation state may have to hold crypto,”
The statement of Srinivasan comes after U.S. President Donald Trump and U.S. Federal Reserve Chairman Jerome Powell discussed bitcoin on the same day.
At the Senate Testimony earlier this week, Federal Reserve Chairman Jerome Powell said that given the current level of adoption of crypto assets like bitcoin, the asset class does not pose a serious existential threat towards reserve currencies such as the U.S. dollar.
“Things like that are possible but we really haven’t seen widespread adoption. Bitcoin is a good example. Really, almost no one uses it for payments. They use it more as an alternative to gold, it is a store of value, it is a speculative store of value like gold,” he said.
However, Powell emphasized that it does not mean crypto assets would not succeed and if they begin to receive widespread adoption, the U.S. could see a return to the era of having many different currencies.
“If we do see it, you could see a return to an era in the United States where we had many different currencies in the so-called national banking era,” Chairman Powell added.
Industry executives generally responded positively towards the remarks of Powell on the acknowledgment of bitcoin as a store of value and an alternative to gold, indicating that the perception of the public and the authorities toward crypto assets may be changing.
Based on the noticeable change in the stance of various government entities towards crypto assets, Srinivasan said that countries may have to hold crypto assets in the long term if the asset class continues to grow at the current rate.
While Powell offered a cautious viewpoint on the growth of crypto assets, President Trump criticized bitcoin and other crypto assets, stating that unregulated crypto assets can facilitate unlawful behavior.
As the industry matures with advanced safeguards to prevent activities that governments are primarily concerned about in the likes of money laundering and terrorist financing, the concerns of President Trump could become resolved over time.
President Trump said:
I am not a fan of Bitcoin and other Cryptocurrencies, which are not money, and whose value is highly volatile and based on thin air. Unregulated Crypto Assets can facilitate unlawful behavior, including drug trade and other illegal activity.
Similarly, Facebook Libra’s “virtual currency” will have little standing or dependability. If Facebook and other companies want to become a bank, they must seek a new Banking Charter and become subject to all Banking Regulations, just like other Banks, both National and International. We have only one real currency in the USA, and it is stronger than ever, both dependable and reliable. It is by far the most dominant currency anywhere in the World, and it will always stay that way. It is called the United States Dollar!
Brian Armstrong, the CEO of Coinbase, suggested that the U.S. President needing to respond to the growth of crypto assets can be considered as an optimistic indicator for the long term survivability of the market.