#Regulating Bitcoin: The Irony of Storing Bearer Assets in Partially Provisioned Banks

According to reports, Gabor Gurbacs, Director of Digital Asset Strategy at VanEck, an investment management company in New York, stated on social media that regulatory agencies are pushing for the custody of valuable fully provisioned bearer assets (such as Bitcoin) in partially provisioned banks (many of which are now bankrupt), which is highly ironic. Always question the statements of regulatory authorities and consider the views of long-term practitioners/asset owners.

Gabor Gurbacs: Auxiliary storage will become standard within 5-7 years

Bitcoin, the widely popular digital asset, has been a topic of debate due to its decentralized nature. While enthusiasts continue to promote the benefits of transacting without intermediaries, regulatory bodies around the world are concerned about the potential risks associated with the use of cryptocurrencies. In recent news, Gabor Gurbacs, Director of Digital Asset Strategy at VanEck, has raised an eyebrow over the regulatory agencies’ move to mandate the custody of valuable fully provisioned bearer assets like Bitcoin in partially provisioned banks. In this article, we will explore the irony of storing bearer assets in banks, the implications of the regulators’ move, and the significance of hearing from long-term practitioners and asset owners adding value to the discourse.
##The Irony of Storing Bearer Assets in Banks
Bearer assets are financial instruments that grant ownership without any documentation. Bitcoin, like traditional bearer assets, is fully owned by its holder, and transactions are facilitated without intermediaries like banks. This makes it alluring to investors who seek anonymity and freedom from financial regulation. However, regulatory bodies are wary of the risks that come with transacting outside the financial system. They are pushing for laws that curb illegal activities relating to cryptocurrency, primarily money laundering and tax evasion.
Despite the mistrust between regulators and Bitcoin holders, the idea of storing assets in banks seems to be counterintuitive. Banks’ centralization and intermediaries stand against Bitcoin’s purpose of decentralization. Gurbacs points out that banks’ partial provisioning requires financial intermediaries, which goes against Bitcoin’s peer-to-peer transfer. Furthermore, history has shown that the banking system is not immune to crises, and Bitcoin holders might face an even greater risk by storing their asset in a partially provisioned bank.
##The Implications of The Regulators’ Move
The regulatory agencies’ move is highly critical, primarily because it makes it compulsory for Bitcoin holders to use the same banking system they want to avoid. The mandate to store assets in partially provisioned banks is seen as a step back in the adoption of Bitcoin as a legitimate form of currency. Regulation can establish guidelines that facilitate the integration of Bitcoin and other cryptocurrencies into the global economy. However, it is advised that regulation should aim to preserve the nature of Bitcoin, which is decentralisation.
If regulators continue to mandate banks’ ownership for Bitcoin holders, the community might lose trust in the sanctity of ownership of Bitcoin and other cryptocurrencies. This, in turn, might lead to weaker adoption that could ultimately affect the growth and development of blockchain technology.
##The Views of Long-Term Practitioners and Asset Owners
Gurbacs’ statement suggests that the regulatory agencies’ move to mandate custody might be a cause for alarm among long-term practitioners and asset owners. Long-term practitioners and asset owners play an essential role in the growth and development of cryptocurrencies. They provide practical insights into the industry and can help shape the regulatory guidelines to foster its growth.
Regulated custody of cryptocurrency would provide a layer of trust for long-term practitioners and asset owners. However, they should be allowed to have a say in the regulatory process and offer insights on what they consider best practices for storing bitcoin. Regulators should listen to their views and incorporate them into laws, guidelines, or recommendations to avoid a backlash from the community.
##Conclusion
Regulatory bodies worldwide are pushing for the custody of valuable fully provisioned bearer assets like Bitcoin in partially provisioned banks. However, this move appears to be counterintuitive, as it is against the very nature of Bitcoin. While regulation can provide a level of trust and guidelines for the use of Bitcoin, it should aim to maintain the decentralisation of cryptocurrencies. It is essential to listen to the views of long-term practitioners and asset owners when shaping regulations that are suited for the crypto industry.
##FAQs
1. How does storing Bitcoin in partially provisioned banks affect the Bitcoin community?
Ans: Storing Bitcoin in partially provisioned banks goes against the very nature of Bitcoin, which is decentralisation. It makes it compulsory for Bitcoin holders to use the same banking system they want to avoid, leading to a weaker adoption of Bitcoin and other cryptocurrencies.
2. What is the difference between traditional and digital bearer assets?
Ans: Traditional bearer assets like gold require holders always to have physical possession. Digital bearer assets like Bitcoin grant ownership without the need for documentation or intermediaries.
3. What role do long-term practitioners and asset owners play in blockchain technology’s growth?
Ans: Long-term practitioners and asset owners provide practical insights into the industry and can help shape the regulatory guidelines to foster the growth and development of blockchain technology.