Many believe the dollar’s current strength is more a result of the relative weakness of alternatives on the world stage, rather than the soundness of the U.S. economy and financial system itself.
But there is a path to the dollar fending off attacks from rivals, and maintaining its place as the world’s reserve currency.
Or at least that’s the view of longtime investor Kevin O’Leary.
O’Leary, well-known as part of entrepreneurial TV program “Shark Tank,” remains an enthusiastic investor in crypto technology, despite acknowledging taking an investment hit at the crypto winter downturn.
He has been talking about how stablecoins backed by U.S. dollars might mutually benefit both, including at a Spring keynote address at the Bitcoin 2022 conference.
More recently, he gave his assessment on where the political process of regulations stands, and why crypto technology is destined to play a much bigger role in the U.S. economy:
“Well I’ve spent a lot of time on the Hill over the last two months. I’ve met with everybody that’s brought a bill forward. Hagerty, Toomey, Lummis. I mean, there’s a lot of interest in this. Here’s what I think’s going to happen. They’re going to pick one thing and put policy on that. It’s going to be stablecoin to start. And the policy there is going to be pretty clear. All the bills say the same thing. They want total transparency. They want an audit every 30 days. They want no duration more than twelve months on any asset holding up the coin. So that means T-bills on average are going to be seven or eight months duration, and US dollars backing it. And that’s the same kind of rule, you’re going to rule, you’re going to find in a Schwab money market or a Fidelity money market or any money market fund. With the benefit of all of these systems once you put policy in place, having the ability to be a payment system. So I would love to see this happen.”
O’Leary said the U.S. dollar is in a unique position to provide backing to stablecoins, compared with alternatives, and even suggested that the new system might be a successor to the petro dollar standard:
“Once you back the US dollar on a stablecoin, everybody’s going to want to use it. I’m not going to use the Chinese yuan, I’m not going to use the Swiss franc, I’d be worried about liquidity. I’m not going to use the Euro, Euro’s all over the map. I certainly want nothing to do with Russia, and I’m not going to use the British pound. I want the US dollar to be a payment system that everybody else will accept around the world, like they do for commodities like oil [the petrodollar]. It’s priced on the US dollar.”
Not All Politicians Are On Board
Tying dollars to stablecoins might be a way to avoid the further politicization of monetary systems that would inevitably result from directly issuing a retail “digital dollar” CBDC (Central Bank Digital Currency).
Those problems have been exacerbated by the U.S. leveraging the dollar’s monetary system importance to try to punish Russia with sanctions over the Russia – Ukraine conflict.
Russia, China and other nations composing a BRICS coalition (Brazil, Russia, India, and South Africa) have responded by accelerating their efforts to depeg their own monetary fate to the dollar. (See “CHINA GOES BRICS TO COUNTER U.S. GLOBAL ‘HEGEMONY’,” “POLITICIANS PUSH FOR CRYPTO BAN ON RUSSIANS” and “CBDC ON THE SLATE FOR COUNTRIES AROUND THE GLOBE.”)
Influential politicians including Senator Elizabeth Warren (D-MA) aren’t on board with cryptos, though, to say the least. Warren, who chairs the Senate Banking Committee, this past week called for banks to essentially be barred from involvement with cryptocurrencies.
She urged fellow committee members to sign onto a letter to the Office of the Comptroller of the Currency (OCC) requesting that banks stop offering crypto services including crypto custody.
Warren has long been an advocate for cracking down on crypto technology, and for having the U.S. issue a CBDC.
Many others believe the Senator’s view profoundly misapprehends the scope and innovations of crypto technology, and that regulatory crack downs would only send the innovation and benefits to friendlier climes.
O’Leary clearly takes that view. He said the idea that the dollar should be threatened by cryptocurrencies need not be the case at all:
“So if we get stablecoin policy, you talk to any policymaker about this, they get the joke in 2 seconds. It’s so simple to understand this. Some of the issuers will become FDIC insured, they’ll be like a bank. Others will say no, I don’t want to be FDIC insured. And we’ll have a plethora of different offerings, all around the same policy. So I can choose, maybe I’ll put some money into the Fidelity one. I’m saying the same thing I do right now. I put dollars into the Oppenheimer money market. I put money into Schwab’s money market. So the same thing will happen on stablecoins. Now, we just have to wait for policy. And right now in USDC (a stablecoin issued by Circle), the one that’s holding the buck rock solid, 54 billion in assets right through the week, right through the correction. No problem with liquidity. I wrote more contracts this week on it.”
The Future Is With Cryptos, Says O’Leary
O’Leary pointed out several reasons for optimism regarding the crypto sector, despite the current downturn (which of course hasn’t been limited to cryptos, though they’ve experienced some of the steepest declines).
He predicts cryptos will eventually compose the 12th major sector of the overall economy that includes Healthcare, Technology, Energy, Real Estate, Industrials, Consumer Staples and other components.
“It’s just too much productivity, opportunity here around payment systems and all kinds of other attributes of these blockchain projects that we just don’t yet know what the upside is going to be.
“And I’d argue this. If you go to any graduating [college] class, particularly now, it’s very timely to say this, ask any engineer cohort, you’re going to find a third of the engineers go onto the chain. They want to work there. They don’t want to work in the other eleven sectors of the economy, they want the opportunity to create something new. And that’s why you’ve got so much intellectual capital going into this space. You know with certainty down the road that the next genius ideas are going to come from this.”
O’Leary reportedly currently allocates about 20 percent of his investment portfolio in cryptos.
In an interview this past week with Stansberry Research, the investor mentioned Bitcoin and Ethereum as his main crypto holdings, but also gave positive assessments of “altcoins” including Polygon (MATIC), Solana (SOL) and Hedera (HBAR), according to thedailyhodl.com and other outlets.
O’Leary also said the current downturn has presented an opportunity to increase his crypto holdings at attractive prices.
“This is an opportunity to say to myself or anybody, look, if I believe in three years, 36 months, that there will be policy on bitcoin, do I want to own it after policy comes and all the institutions start buying it, or do I want to take a chance and live with some volatility now and buy it here at 24 or 23 or 20 thousand [dollars], whatever it’s going to go to? I don’t know. But if you believe in bitcoin, it’s a buying opportunity. But you can’t guarantee that you’re catching the bottom. Nobody catches the bottom.”
For related articles, see:
- “ACLU CALLS FOR A RETAIL DIGITAL CASH THAT FUNCTIONS LIKE PHYSICAL CASH” (7 Jun 2022)
- “A U.S. CBDC WON’T SAVE THE DOLLAR” (5 Apr 2022)
- “DESPITE RECENT CRASH, INVESTORS PUT NEW MONEY INTO CRYPTO” (24 May 2022)
- “A PERVERSION OF CRYPTOCURRENCY” (12 Oct 2021)