Terry Duffy, the Chairman of the Chicago Mercantile Exchange [CME], is in the news after he cast doubts on the prospects of a publicly traded Bitcoin asset. Cryptocurrencies backed by real assets like fiat currency would be the only form of virtual currency that would fit the bill under regulatory oversight, he stated.
During a recent interview at FIA’s International Futures Industry conference, Duffy voiced his support for stablecoins backed by real dollars.
Stablecoins like Tether [USDT] are backed one-for-one by fiat and hence, are the ‘best of both worlds.’ They allow users to delve into the cryptospace, enjoying ubiquity and universality of payments while still being tethered to the centralized financial world.
“How do we figure out how to get the cryptos in there, but just have them backed up by fiat, and let that work as it is.”
Cryptocurrencies are often seen as just another investment vehicle, where the value of the underlying coin is more important than its use cases. Duffy stressed that the adoption and use of decentralized currency should be of greater concern, than the actual rise and fall of the market.
The CME Chairman added,
“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?”
Publicly traded Bitcoin [BTC] assets, like the much-touted Bitcoin Exchange Traded Fund [ETF] have been in a regulatory shackle for months now. Despite two proposals, the Securities and Exchange Commission [SEC] is yet to give its approval, with many claiming that doing so is hindering the mainstream growth of decentralized currency.
Duffy added that the main reason for the backlash against the ETF was the underlying cryptocurrency’s principle of limited supply. The protocol placed into Bitcoin is that there can only be 21 million BTC in supply, which the market is expected to reach in 2140 when the mining rewards dwindled to 0.
Cryptocurrency proponents often cite this principle as one that balances the market and reduces inflationary pressure. Sovereign currency can be created by the government at any time, which is a fundamental point of opposition within the crypto-community.
In light of this debate, Duffy stated that governments cannot operate unless “they run on a deficit.”
Regulation is the single biggest hurdle for cryptocurrency adoption, something Duffy acknowledged. The cryptocurrency community needs to get the nod from financial watchdogs if they want to break into the forefront of the financial realm, he believes.
Duffy concluded by highlighting the skepticism that regulators have when approaching the topic of cryptocurrencies,
“I do believe that the regulators right now are a little careful about just rubber stamping anything as it relates to crypto.”
The CME group, together with its cross-city rivals, the Chicago Board of Options Exchange [CBOE], set the cryptocurrency market alight by launching Bitcoin Futures in 2017. However, 15 months after the launch, the CBOE decided to delist the XBT contracts for March 2019, allowing the CME group to take over the BTC Futures market.
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