As I (Chris Lowe) showed you yesterday, central banks in China and Nigeria have launched a new type of digital-only currency that will replace the physical cash in your wallet.
They’re just two of about 80 central banks – including the U.S. Federal Reserve – that want to make the switch.
This new kind of money is called a central bank digital currency (CBDC).
And it’s a lot like bitcoin (BTC).
CBDCs exist in digital form only…
You send and receive them through a wallet app on your smartphone…
And they run on blockchains, the digital ledger technology behind bitcoin and other cryptos.
That’s led some folks to worry that regulators in the U.S. will ban bitcoin to make way for a CBDC version of the dollar – what we’ve been calling FedCoin here at the Cut.
They also worry that CBDCs will somehow replace bitcoin.
But today, you’ll hear from our crypto investing expert, Teeka Tiwari, on why that’s not going to happen.
And you’ll see why a world in which all currencies are purely digital is actually bullish for bitcoin.
It was a big one…
Early-stage tech investor Jeff Brown went live with his Day One Summit. And more than 15,000 of your fellow readers showed up to hear what he had to say.
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You see, after nearly seven years of preparation and planning, he’s finally opening access to a new advisory that will help everyday investors like you get in on these lucrative deals.
So if you missed it, catch the replay of Jeff’s event while it’s still online.
Now, back to whether Washington will ban bitcoin and other cryptos to make way for a digital-only dollar…
In September, China’s central bank posted a memo on its website. It outlined the reasons for a nationwide crackdown on crypto exchanges and transactions.
It claimed the ban was out of concern for how cryptos are “disrupting economic and financial order, breeding illegal and criminal activities such as gambling, illegal fund-raising, fraud, pyramid schemes, and money laundering, seriously endangering the safety of people’s property.”
And earlier this year, Nigeria’s central bank did something similar.
So it’s natural to worry that the same thing might happen in the U.S. But there are two important reasons it won’t.
China is a highly centralized, one-party state run by a dictator for life, Xi Jinping.
And Xi and his officials in the ruling China Communist Party (CCP) are paranoid about any technology outside their control.
Already, the party famously censors the internet in China. To do that, it built the Great Firewall of China, the world’s biggest internet monitoring and censoring system.
The CCP is so hell-bent on control, in August it even banned kids from playing computer games for more than three hours a week.
So it’s no surprise China has cracked down on crypto…
And Nigeria is an emerging economy whose currency, the nairu, has fallen about 61% versus the dollar over the past decade.
The U.S., on the other hand, has the world’s reserve currency and the world’s largest and most innovative economy.
And as we saw in the 1990s and early 2000s with the internet and mobile web, U.S. regulators have embraced disruptive new technologies in the past.
The U.S. economy has plenty of problems. But unleashing trillions of dollars in new wealth from breakthrough digital tech isn’t one of them.
That’s why U.S.-based Apple (AAPL), Amazon (AMZN), Google (GOOG), Microsoft (MSFT), and Facebook (FB) (soon to be Meta) are among the biggest companies in the world today.
Visa (V) recently launched crypto-linked cards that make it easy to convert and spend cryptos at 70 million merchants worldwide.
Mastercard (MA) also has a card option that allows folks to spend their crypto assets anywhere that accepts Mastercard.
And at the end of last year, online payment company PayPal (PYPL) gave its 300 million customers the option to buy, hold, and sell bitcoin and other popular cryptocurrencies.
It joins rival online payment company Square (SQ) in offering crypto trading services.
And investing platform Robinhood (HOOD) is testing crypto wallets with select users. It plans to roll out the service to all its 22.5 million customers.
Tesla (TSLA), the world’s most valuable automaker, owns roughly $2.5 billion of bitcoin as part of its treasury reserves.
Enterprise software maker MicroStrategy (MSTR) has more than $6.6 billion of its treasury reserves in bitcoin.
And Square has $274 million of bitcoin in reserve.
The head of the Federal Deposit Insurance Corporation (FDIC), Jelena McWilliams, is even talking about making bitcoin a reserve asset for banks.
That’s a huge deal. The FDIC is the federal agency Congress created in 1933 to maintain the stability of the U.S banking system.
Here’s what McWilliams told Reuters in an interview last month on the sidelines of a financial tech conference…
I think that we need to allow banks in this space, while appropriately managing and mitigating risk. […] If we don’t bring this activity inside the banks, it is going to develop outside of the banks. […] The federal regulators won’t be able to regulate it.
These Wall Street banks all plan to offer crypto services to their customers…
|
Bank |
Number of Checking Accounts |
|
Wells Fargo (WFC) |
70 million |
|
Bank of America (BAC) |
66 million |
|
JPMorgan Chase (JPM) |
55 million |
|
BNP Paribas (BNP) |
33 million |
|
Deutsche Bank (DB) |
24 million |
|
Morgan Stanley (MS) |
8.2 million |
For the first time, customers of hundreds of U.S. banks will soon be able to buy, hold, and sell bitcoin through their existing 300 million checking accounts.
That’s before we talk about the bitcoin futures exchange-traded funds (ETFs) the Securities and Exchange Commission (SEC) just greenlit…
Or the $60 billion in assets the Grayscale Bitcoin Trust (GBTC) has under management. That’s $1.2 billion more than is invested in the leading gold fund, the SPDR Gold Trust (GLD).
And billionaire Wall Street investors such as Stan Druckenmiller, Paul Tudor Jones, and Bill Miller are all invested in bitcoin.
That’s why Teeka says a bitcoin ban won’t happen in America…
Trying to ban bitcoin would be the most unintelligent and misguided act since alcohol prohibition. The SEC is smart enough to know that.
I want you to always remember why we won’t see a crypto ban – Wall Street greed. All you have to do is look at the massive rate of adoption and bet on Wall Street’s greed and pervasive political influence.
Think about it. In 2008, Wall Street “banksters” crashed the global economy, bankrupted one-third of America, and made billions of dollars in the process… And none of them went to jail.
With the amount of money at stake for the big banks, you can see why the U.S. government will never ban bitcoin. There are too many powerful people getting obscenely rich from it.
After all, if everyone is spending FedCoins using a wallet app on their phones, maybe we won’t have any need for bitcoin.
But Teeka says the opposite is true. Here he is with more…
Contrary to what many people think, CBDCs will make bitcoin and other cryptocurrencies much more valuable.
Cryptos afford users greater anonymity. You also have scarcity with bitcoin – a hard cap of 21 million coins. You won’t have that with CBDCs. There will still be a central bank that can fiddle with interest rates and balloon the money supply, inflating away your wealth.
Regulators are thinking, “We can kill the market for private cryptos by creating our own digital-only currencies.” But my call is it will expand the crypto market, not shrink it.
So don’t spend too much time worrying about the feds banning crypto. Instead, focus on the profit opportunity ahead that Teeka has been outlining… and put even just $100 into bitcoin today.
If you’re new to crypto, you can follow the easy steps in this free report to get started.
Regards,
Chris Lowe
November 18, 2021
Barcelona, Spain