The Senate has blocked the anti-shutdown bill and difficult times are ahead for the US, with a debt crisis threatening to drag the economy down. In this scenario, there are those who see an opportunity for cryptocurrencies to grow.
Kim Dotcom: the US debt will benefit crypto
This scenario was suggested by Kim Dotcom, who knows the crypto world well. In a tweet, the entrepreneur known for being the founder of Megaupload wrote that the US government is close to default due to non-payment of debts.
“Get ready for big economic turbulence. Get out of stocks and the US dollar. Get into crypto”.
His reasoning is simple: financial markets are likely to take a heavy hit. Cryptocurrencies, on the other hand, won’t.
The bottom line is that if this bill to raise the debt ceiling is not passed in the Senate, the US will risk a recession.
In times of recession, we have seen how Bitcoin and cryptocurrencies become a real store of value. This is what speculators in the sector are aiming for.
Cryptocurrencies on the fence
In the US, however, cryptocurrencies are not going to have an easy time. SEC chairman Gary Gensler has reiterated that trading platforms must play by the rules or else “it will not end well”.
As Bloomberg reports, these were his words spoken at the Code Conference in Beverly Hills:
“There’s trading venues and lending venues where they coalesce around these, and they have not just dozens but hundreds and sometimes thousands of tokens on them. This is not going to end well if it
stays outside the regulatory space”.
The Wild West to be conquered
There is an open debate in the US about whether cryptocurrencies need to be regulated (or not). Some people, like the CEO of Ripple Brad Garlinghouse, do not want to be told that the crypto sector is the Wild West. And if that is the case, he said in a recent TV interview, we might as well regulate the sector once and for all. Regulation will be needed, especially now that cryptocurrencies are gaining more and more interest, whereas the stock markets seem to be on edge.
On the one hand, investors are looking at what is happening in China, endangered by the collapse of Evergrande that could have a strong backlash on the country’s economy with the risk of contagion. On the other hand, the United States itself seems to be struggling with its debt situation.
Treasury Secretary Janet Yellen has once again appealed to members of parliament to break the deadlock. Failure to do so would open up unprecedented scenarios for the US.