The pandemic has achieved for cryptocurrency adoption in 10 months what might have otherwise taken 10 years, the economist said
British economic and financial historian Niall Ferguson said in an article for Bloomberg that the US President-elect Joe Biden’s administration must seek to integrate Bitcoin with the financial system rather than focusing on creating a “Chinese-style digital dollar”.
In the article titled ‘Bitcoin Is Winning the Covid-19 Monetary Revolution’, the economist speaks about Bitcoin changing the opinions of its critics, the impact of the pandemic on the pace of a shift in the monetary system and advises on the way forward for the United States.
Ferguson explained that the COVID-19 global pandemic has positively contributed to cryptocurrency adoption and has accelerated a “monetary revolution” in various countries.
“What might have taken 10 years has been achieved in 10 months. People who had never before risked an online transaction were forced to try, for the simple reason that banks were closed. Second, and as a result, the pandemic significantly increased our exposure to financial surveillance as well as financial fraud”, he said, outlining the trends that have emerged during the pandemic that benefit Bitcoin.
The historian noted that China has been “advancing rapidly” in the field, especially with the rollout of the digital yuan and the increase in the use of mobile payments. Apps like Alipay and WeChat Pay reportedly handle roughly $40 trillion in transactions annually, he added.
Ferguson believes that these measures by the Chinese authorities will serve as a template for other countries that seek to develop their own cross-border payment systems and remittance payments. He advised the United States to follow China’s footsteps.
“Even governments that are resisting Chinese financial penetration, such as India, are essentially building their own versions of China’s electronic payments systems”, Ferguson said.
“Rather than seeking to create a Chinese-style digital dollar, Joe Biden’s nascent administration should recognise the benefits of integrating Bitcoin into the US financial system”, he added.
Authorities in the US already have methods in place to deal with enforcement issues surrounding Bitcoin. The Internal Revenue Service requires users to declare crypto holdings in their tax returns and the agency might be going after users who do not comply with tax and reporting requirements. The Federal Bureau of Investigation has also been proactive in money laundering cases that involve crypto.
“The point is simply that the financial data of law-abiding individuals are better protected by Bitcoin than by Alipay”, said the historian.
While Biden’s views on cryptocurrency like Bitcoin or the possibility of a digital dollar are not well-known, there are indications that his administration could be in favour of a friendlier crypto regulatory framework in the United States.
Written by Harshini Nag