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Bridgewater Associates founder and CIO Ray Dalio is expecting the growth of central bank digital currencies (CBDCs), but says he still sees problems with bitcoin as a currency.

Dalio broke down his thoughts on bitcoin on Yahoo! Finance earlier this week. He said that, theoretically, bitcoin could be used as currency, but because it is too volatile to be a stable store of wealth and there are too few use cases for it to be used as a medium of exchange, it fails in practice. Additionally, Dalio said bitcoin’s lack of government control could stand in the way of its use as currency.

“I don’t think digital currencies will succeed in the way people hope they would for those reasons,” he said.

Dalio also compared bitcoin to gold in that gold was once scrutinized by governments for its use as a store of wealth, but he doesn’t see bitcoin replacing gold. 

“I wouldn’t prefer bitcoin to gold,” he said. “Gold will be the vehicle that central banks and countries use as an alternative to cash.”

This contrasts recent comments from billionaire hedge fund manager Stanley Druckenmiller who said he believes bitcoin will continue to attract millennials and “new West Coast money” as a store of value. Druckenmiller said he views investing in gold similar to investing in bitcoin, with bitcoin perhaps the better bet over time due to its illiquid nature.

© 2020 The Block Crypto, Inc. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

Quick Take

• CMT Digital, a division of the CMT Group, is a Chicago-based firm focused on crypto asset trading, blockchain investments, and legal/policy engagement within the digital asset/blockchain sector
• In 2019, CMT Digital was one of the most active funds in the blockchain/crypto vertical with a total of 11 investments. (Seed, Early Stage, Late)
• In total, the firm has deployed capital into at least 34 startups and protocols across 9 verticals, which The Block has mapped out.

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A group of Congressional Democrats has issued a public letter to acting Comptroller of the Currency Brian Brooks in which they criticize his office’s “unilateral actions in the digital activities space” including those focused on crypto custody and stablecoins.

The letter was penned by progressive Democrats including Reps. Rashida Tlaib, Stephen Lynch and Ayanna Pressley. Reps. Jesús “Chuy” García, Barbara Lee and Deb Haaland also signed the letter. In it, they urged the OCC to collaborate with Congress on digital issues rather than take what they described as a go-it-alone approach.

In the letter, the Representatives invoke the OCC’s recent move to allow national banking institutions to hold custody of crypto-assets on behalf of their customers — but they expressed caution about the manner in which these activities would be overseen by federal officials. 

“Small and minority-owned financial institutions continue to face a deposit crisis and the Covid19 pandemic has only exacerbated this problem. For some of these banks, the ability to hold crypto-asset deposits could create beneficial outcomes,” they wrote. “Further, the movement toward digital banking activities has the potential to increase access to banking services. However, these potential gains stand to be lost, and significant consumer harm to be caused, if these new activities aren’t properly regulated. It is in the best interest of both banks and consumers for our regulators to collaborate and move forward responsibly.”

Further, the letter stated that the Representatives “question whether this is an appropriate priority for the OCC in the midst of this pandemic.”

They continued:

“Arguably, the immediate needs of millions of at-risk individuals who have not yet received an economic stimulus check and/or cannot deposit their funds in a bank, deserve greater attention than an effort to increase access to financial services to the ‘banked community’ via mobile phones,” the letter states. “Our concern regarding the OCC’s excessive focus on crypto assets and crypto-related financial services is shared by the American Bankers Association and other trade groups who have expressed similar reservations that such services move too far away from the core business of banking.”

The letter concludes with a series of questions about the OCC’s policies on stablecoins, digital assets and payments, as well as the extent to which the OCC has collaborated “with your fellow regulators on [OCC] decisions.”

Read the full letter here. 

© 2020 The Block Crypto, Inc. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.