We are on the cusp of a serious shift in financial, political and social power from the infant boomer generation to the millennial generation. Combined with digitalization and changes in monetary policy, it will proceed to drive regulatory changes that support the adoption of cryptoassets.
Regulation is commonly cited because the primary factor hindering the adoption of this undervalued asset. A recent Campden Wealth Survey cited the dearth of regulation because the second biggest obstacle to family offices investing in cryptocurrencies. This is comprehensible considering the regulatory landscape within the United States since collapse the crypto exchange FTX.
Gary Gensler’s Securities and Exchange Commission (SEC) took an iron fist against the crypto industry, taking enforcement motion against Coinbase, Kraken, and plenty of other legitimate corporations. In addition, Martin Gruenberg of the Federal Deposit Insurance Corporation (FDIC) made life difficult for the crypto industry by utilizing the banking sector as a weapon. It was difficult for crypto corporations like ours to get the fundamental banking services we’d like to operate.
The excellent news is that conditions have improved significantly over the past yr, allowing demographic changes for use to speed up crypto asset adoption.
Removing regulatory obstacles
Conditions began to alter in June 2023 with a Constructive verdict in court case against Ripple (XRP)providing much-needed clarity on the applying of securities law to cryptocurrencies. It also demonstrated that the courts could get up to the SEC and hold the institution accountable for its rulings.
In August 2023, the U.S. Court of Appeals for DC Circuit called the SEC “arbitrary and capricious” following its decision to reject Grayscale’s Bitcoin ETF. This decision led to the approval of 11 Bitcoin ETFs in January 2024 and laid the groundwork for the approval of Ethereum ETFs in May 2024. ETFs have proven essential not just for flows but additionally for institutional credibility as they create broad support. Some of the world’s largest asset managers with solid ties in Washington have developed Bitcoin products and are marketing the worth proposition to their clients.
Cross-party support
The approval of Bitcoin ETFs was monumental, but uncertainty about crypto regulation remained in Washington. Regulatory measures by the Department of Justice vs. Tornado Cash and Samourai Wallet in 2024 pointed to continued regulatory resistance. However, events in May clearly showed that the pendulum is now swinging in a more positive direction.
In May 2024, the House of Representatives passed a resolution HJ Res. 109which repealed the SEC’s Staff Accounting Bulletin (SAB) 121. SAB 121 imposed unenforceable measures on digital asset custodians and threatened their viability. President Biden vetoed the Congressional measuresBut the more essential news is the bipartisan support for the bill in Congress, including from key Democrats like Nancy Pelosi.
In addition, the resignation of FDIC Chairman Gruenberg is imminent, which can mean the top Operation BottleneckAlthough Gruenberg’s decision is said to the allegations of his misconduct, it definitely contributes to a way more positive regulatory landscape than it was just a couple of months ago.
It now appears that the tough regulatory measures against the crypto industry are more idiosyncratic and coming from certain lobby groups. A broader variety of members of Congress, including Democrats, are taking a more pragmatic view of the crypto industry and the technology that underpins it.
The unstoppable market forces
I actually have long held the view that three powerful market forces – digitization, monetary changes and demographic changes – make the adoption of cryptocurrencies inevitable:
- Digitalization: The world is becoming increasingly digital, but banking and finance aren’t greatly affected. Bitcoin represents the start of digital scarcity. Bitcoin and cryptocurrencies are bringing money and finance into the digital age.
- Currency shifts: Monetary systems don’t last ceaselessly. The global reserve system based on the US dollar has been in place for the reason that Seventies and is groaning under excessive debt and very low rates of interest. This suggests that it cannot last ceaselessly. An alternative monetary system is required, and there aren’t many viable alternatives.
- Demographics: Baby boomers have dominated the worldwide economy, politics and culture for the past 50 years. They control about 70% of disposable income and 50% of wealth within the United States.
However, attributable to their advanced age, the reins will pass from baby boomers to millennials over the following decade. By 2025, millennials are expected to make up 40% of the U.S. workforce, bringing with them changes in work culture, job expectations and profession paths.
Millennials are way more tech-savvy and More open to crypto than baby boomers. Some millennials spend quite a lot of their time online, at the same time as children. They may take digital ownership and online security as a right.
The Campden Wealth 2023 Survey of family offices confirm this general change and cite “cultural change” as an important result. Almost half (46%) of family offices expect a change in leadership to the following generation inside the following decade.
Crypto will ultimately prevail
“The truth will ultimately prevail for those who make an effort to bring it to light.”
George Washington
As these trends proceed, the final perception of cryptocurrencies will change, driving adoption beyond mere allocation. Politicians might want to adopt a more crypto-friendly stance to appeal to an increasingly influential constituency. The recent appointment of JD Vance and Vivek Ramaswamy to key positions in Trump’s presidential campaign reflects the early stages of this trend. If Trump is elected, these two pro-Bitcoin advocates could be the primary millennials within the White House.
Companies like PayPal will view cryptocurrencies as a value of doing business to stay relevant within the digital age. Investment managers shall be forced to rethink allocation when assessing the potential for underperformance.
A Nomura Investor Survey 2023 suggested that investors will allocate between 5% and 10% to digital assets over the following three years and that support for crypto products by traditional financial institutions (Tradfi) is very important. We now have that support through ETFs. Almost half (45%) of survey respondents said their and/or their clients’ overall exposure to digital assets shall be between 5% and 10% over the following three years and only 0.5% said they may haven’t any exposure in any respect. Notably, Inflows of $150 billion are expected by the top of 2025.
Money is a technology that facilitates trade and savings. Bitcoin and cryptocurrencies are merely one iteration within the evolution of monetary technology – a robust, perhaps revolutionary iteration. As the winds of time blow, truth prevails. Computers and algorithms bring integrity to the economic system and create a fairer platform for business. New technologies at all times face resistance, but demographic shifts suggest that cryptocurrency adoption has strong tailwinds politically, economically and financially.
