Forefront Communications

Traders Magazine: A Tipping Point for Digital Assets

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This article was contributed by Kapil Rathi and Kristin Boggiano, Co-Founders CrossTower

The recent confluence of macroeconomic forces – a global pandemic and unprecedented experiments in monetary policy combined with the rise of stablecoins and central bank digital currencies (“CBDCs”) – is a tipping point for broader acceptance of cryptocurrencies and other digital assets.

Global quarantining has compelled millions of people to move their financial lives online, and embrace commerce without cash, plastic or nonessential intermediaries. It will be fascinating to see whether this unplanned social experiment will open more minds (and crypto wallets) to the use of digital assets in the months and years ahead.  But other forces are at play in the rise of digital assets.

Governments around the globe are printing money to mitigate the economic impact of coronavirus while individuals who have experienced hyperinflation are increasingly turning to cryptocurrencies as an alternative to their depreciating government-issued fiat.[1]  Many market participants expect heightened inflation given the unprecedented increase in the money supply.  The hallmark of cryptocurrencies like Bitcoin is their supply inelasticity and store of value, which make them relatively difficult to seize, freeze or devalue and a natural hedge against inflation.

In May, macro investor Paul Tudor Jones publicized his recent investment in Bitcoin for exactly this purpose, likening it to the choice of gold during the bear markets of the 1970s.[2]

There is ample evidence around the globe that the adoption of digital assets is on the rise. The World Economic Forum established a new consortium to govern digital currencies, including regulated government-issued stablecoins, which central bankers have increasingly embraced.[3]  There is widespread discussion in the media about the imminent issuance of China’s DCEP (digital currency / electronic payment), the official name of China’s CBDC.[4]  In March, the Indian supreme court opened the Indian market to digital currencies in a landmark supreme court decision, bringing a massive new base of digital asset market participants.

Here in the US, former Chairman of the CFTC, Chris Giancarlo, is heading up the Digital Dollar Project which published its white paper in May on the use cases of digital USD.[5] In April, Libra’s new whitepaper focused on introducing potentially billions of people to the Novi wallet.[6]

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