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While Bitcoin (BTC) adoption has soared with several publicly-listed firms even keeping the crypto in their balance sheets, investor Kyle Bass warns that governments might soon start to clamp down on digital currencies. The chief investment officer and founder of Hayman Capital Management predicts that the U.S. Treasury and the IRS could introduce intense crypto regulation by 2022.
Bass acknowledged Bitcoin and crypto’s appeal to that millennials as many use the asset as an inflationary hedge. “I know millennials love private crypto and I know that people like to think that it’s a great substitute for gold and/or an inflation protector,” he said in an interview on the Investor’s Podcast Network.
However, he warned on the possibility of regulatory intervention, which could negatively affect the digital asset industry. “I tend to think that you’re going to see authoritarian governments and western democracies alike start to really clamp down on Bitcoin.”
He cited the Chinese government’s ban on crypto trading and mining, which forced China-based mining firms to close shop or relocate their operations to other countries. “China has first kicked the miners out and then private crypto,” Bass added. “They did that a year earlier than I expected them to do it.”
However, the U.S. government might soon impose stricter regulations on the crypto market as well. “I think next year you’re going to see intense regulation come from the U.S. Treasury and the IRS.”
Bitcoin has performed well in the past but Bass believes that now the days of making “easy money” on digital currencies might be over. He also believes that there are better options than BTC for those who want to beat inflation.
“I know BItcoin has done well, I know that the returns have literally been off the charts for many and there are newly minted billionaires out there in Bitcoinland,” he said. “I think the easy money has been made… I think from here on out, it’s going to be really difficult to make money there.”
Bass said that one way to stop the degradation of one’s savings due to inflation is to own rural and revealed he launched a private equity firm to engage in the acquisition of rural land. He also believes in the staying power of blockchain technology and NFTs but is still uncertain about the longevity of private cryptos such as Bitcoin and Ethereum.
“I own a couple of private positions in big firms that are trading, lending against, and developing Bitcoins and NFTs,” Bass added. “I think that the blockchain, I think that the NFTs, those things are all very much here to stay. Private crypto, I’d put a question mark by over the long run and so I’d be careful with that now.”
