Webinar Takeaways: Yassine Elmandjra and Cathie Wood on Governments Shutting Down Bitcoin

The following has been transcribed from the February 9, 2021 Ark Webinar. Edits and comments are my own and were done in a way to best preserve the voice of Cathie Wood and Yassine Elmandjra

This dialog was taken from the Q & A portion of the webinar.

Cathie Wood: "For those who are concerned about Bitcoin being shut down by governments, we believe that their decisions--and they are proliferating around the world--to issue their own CBDCs, is actually validating the space and lowering the risk of Bitcoin being banned."

Phil here: CBDC stands for central-bank digital currency. China's digital Renminbi (Yuan) is the farthest along this path.

This novel form of currency provides a level of oversight and control that central banks have never had. In theory, these will allow central banks to...

1. Track the path of a unit of currency as it changes hands around the world.
2. Know the exact quantity of it's money supply at any point in time, past or present.
3. Conduct financial transactions with it's citizens without having to rely on banks as intermediaries.

There are other benefits (or drawbacks, depending on your preference of government oversight) but those are some of the bigger ones.

Moderator: "Thanks, Cathie. You touched on this next question. Could there ever be an outright ban in the US on Bitcoin?"

Yassine: "What's really interesting is the very fact that this is being acknowledged as a potential threat to monetary policy is definitely a change of tune from what we've seen just a few years ago.

This question alone goes to show how far Bitcoin has come from being just this nerd money, or this VC pump and dump money, to now governments questioning whether or not it poses a threat.

In the US specifically, I think at this stage, it's going to be very hard to ban. At this point, there are just so many interested parties in Bitcoin, and there is no single button that the government can press to shut Bitcoin down. So really the more it establishes itself, the harder it is to stop.

I think trying to ban Bitcoin today, it would really be an attack on the balance sheets of corporations, like a Tesla, or Square, on funds, on banks, on investors.

And then given the borderless, apolitical nature of Bitcoin, nation-states are going to realize that banning Bitcoin is like banning the internet, which means that for every country that bans it, you'll have another country that's going to actively promote it, and going to attempt to encourage capital and talent from businesses and entrepreneurs who are actively involved in this industry."

Phil here: ☝🏼 That previous paragraph is the key takeaway from this Q & A section of the webinar.

"So at this stage, I think Bitcoin has reached a tipping point where it is not in the US's best interest to ban it, and we're likely going to perhaps see regulation, but I doubt an outright ban."

Cathie Wood: "And maybe Yassine, you want to talk about the changes at the SEC in this regard?"

Yassine: "We know that Gary Gensler was nominated as SEC Commissioner, which has been very interesting when discussing the implications for the crypto industry. We know that as a regulator, Gary Gensler is very likely the most well-versed regulator in the crypto and Bitcoin space.

Prior to his involvement in the SEC, he was not only involved in the CFTC, but was also involved at MIT as a professor for a blockchain and crypto class. He was also an advisor for the MIT Digital Currency Initiative. All that to say that we feel very strongly about his understanding of the crypto space."

Phil here: This is the kind of insight you can look to Ark for. If you go out and search for Gary Gensler you likely won't find mention of him being associated with crypto. It's not in his Wikipedia page or mentioned in any piece that I read about his appointment to the SEC.

By implication of not being in those pieces about his appointment or in his Wikipedia bio it's feels safe to say that cryptocurrencies, and Bitcoin specifically, are still being underestimated.

Back to Yassine...

"Now, the implications from a regulatory standpoint, and we know that Gary Gensler likes to regulate. He will likely heavily figure out a way to establish himself in the crypto space by regulating it.

But in the long term, I think that this will fare well for Bitcoin, and we have yet to see how it might fare for other cryptocurrencies. The recent news with XRP being deemed a security and questioned around whether other crypto assets are unregistered securities, we might likely see negative implications there, but given his strong understanding of Bitcoin and how positively spoken about the blockchain opportunity, this is a net positive."

Cathie Wood: "And I'd just add that the director of research of crypto at the SEC, and there has been such a person for at least, I think, five years now, she has been promoted so that she reports directly to the Chairman of the SEC, Gensler. I would say that Gary Gensler is much more pro-Bitcoin, and I would suggest that the Ripple-like (XRP) crypto assets out there might have more of a problem than they would have expected now that Gensler's going to be in charge."

Phil here: Let me sum this whole thing up with a quote frequently misattributed to Ghandi....

First they ignore you
Then they laugh at you
Then they fight you <-- Bitcoin is arriving here
Then you win