- What does Donald Trump mean for cryptocurrencies?
- Arthur Hayes talked about this, Gary Gensler, and the cryptocurrency creep on Wall Street in an interview.
- He also explained why the price of Bitcoin could reach $1 million.
Arthur Hayes' first job was on the trading floor of Deutsche Bank in Hong Kong. The day he started, in September 2008, Lehman Brothers filed for bankruptcy. He was 22 years old.
The days of exciting deals and multimillion-dollar bonuses suddenly ended.
Young traders like Hayes, hungry for risk, are wiped out by an onslaught of regulation, compliance departments and stuffy office culture.
Then he discovered encryption.
“When I read the Bitcoin white paper, it really resonated with me and made me understand the real philosophy — like the corrupt banking system and what bullshit it is,” he said .
Fast forward a decade — a stretch that includes co-founding the BitMEX cryptocurrency exchange, becoming a billionaire, and a guilty plea and probation in the United States — and the cryptocurrency industry is starting to look a lot like the banking sector he left behind.
“It still reflects the energy of a really diverse group of people from all over the world”
– Arthur Hayes Oct 14 '17 at 14:25
Financial giants including BlackRock and Franklin Templeton now offer retail investors a cheap and secure way to invest in cryptocurrencies.
Fidelity wants to include Bitcoin in US pension funds.
It’s still the same old business, Hayes said.
“It still has a diverse pool of talent from around the world, from finance or technology,” Hayes said last week from his office in Singapore. “They want something different.”
"What they want is uncapped upside, obviously extremely high volatility, and if you're not diligent, you'll be wiped out very quickly. But at least it creates, either extreme usage of the product or extreme wealth."
Hayes has the credibility of a crypto OG.
He has also become one of the most well-known and followed market commentators in the cryptocurrency and other fields.
Before Monday’s market crash , Hayes spoke with DL News about the election, the financial industry’s acceptance of cryptocurrencies and his thoughts on the price of Bitcoin.
About the election
AH: They think what Trump is saying is right, so he's going to step up. It doesn't matter if it's Donald Trump or Kamala Harris.
DLN: Why?
AH: Yes, cryptocurrencies donate a lot of money . But I don’t think your donations are enough to surpass JPMorgan, Morgan Stanley, Citibank, and Goldman Sachs.
If you think about the people who work in these institutions, they are all people from these banks.
So while it would be great if Trump got elected and did these things, I think he would probably run into the same problems as he did in his first term.
You can say these nice things and you can try these policies, but if the entire government apparatus is against them, nothing will get done.
On Bitcoin and Monetary Policy
AH: Both the Trump administration and the Harris administration will print money. They will do it in different ways. But money will still be printed.
Therefore, your cryptocurrency will go up – the path may be very volatile, but in the end we know where it’s going.
About SEC Chairman Gary Gensler
DLN: SEC Chairman Gary Gensler seems to be the industry's arch-villain. Do you agree with that view?
AH: People are confusing the symptom with the problem. You can listen to his speeches, he's a very smart guy. And when he was in government office, he was a complete idiot.
It's just politics. You can replace him with somebody else. Gary Gensler is not the problem. The SEC is not the problem.
Firing Gary Gensler won’t do anything if your elected representatives choose to consider other things instead of creating a framework for crypto, and a set of regulations you were unhappy with in the first place remain in place.
People were very excited about Gary Gensler, but he didn’t seem to be relevant to them.
About the Bitcoin Reserve Program
AH: I think that would be nearly impossible to achieve even if Trump were elected.
You're going to need a certain number of people to vote for this, and you know, it's going to have some negative impact on the U.S. Treasury or the Federal Reserve or maintaining visibility in the U.S. Treasury market.
DLN: Do you think this is a good idea even if it can’t be done?
AH: Oh, that's a great idea. The US should devalue the dollar and buy Bitcoin and gold. That would solve a lot of their problems.
They will weaken the dollar, and Bitcoin and gold will rise.
Do I think the US government will actively try to acquire Bitcoin? Very doubtful. They will buy gold first and then Bitcoin.
But it's the same business. We do it for the same reasons.
About BlackRock’s Cryptocurrency
AH: The whole point of crypto is that there are no barriers to entry.
BlackRock should be able to use Bitcoin, and people without financial services in the Philippines should be able to use cryptocurrencies.
Are the incentives strong enough? Are the game theory behind how blockchains work and all that stuff strong enough to ensure that centralization doesn’t happen — and if it does, what are the consequences?
I wrote a little bit about, oh, no… the passive disease, is it going to infect crypto, where they’re going to take all the Bitcoins and then ossify the network and all this stuff, right?
In theory it is possible. But it is still an open playing field.
If you own a BlackRock product, you own a derivative of a cryptocurrency, but you don’t own the cryptocurrency – BlackRock owns your cryptocurrency.
So the BlackRock product is an attractive product for people because it's simple, but it's also not a cryptocurrency.
About the price of Bitcoin
AH: In this cycle, the price of Bitcoin is going to go very, very high. Hundreds of thousands of dollars, maybe even a million dollars.
There is too much debt to roll over. We are entering a period of radical change in the global monetary architecture.
We don't know what the outcome will be, but those who have taken full advantage of this opportunity over the past 80 years will be extremely resistant to change.
