As Wall Street attempts to understand where and how cryptocurrencies can fit into its ecosystem, Terry Duffy believes the future won’t look too different from the past.
The CME Group chairman and CEO told Business Insider that stablecoins, cryptocurrencies backed by currencies such as the dollar or euro, could be the best way to enjoy the benefits of using a digital currency that still has some of the characteristics of traditional money.
“How do we figure out how to get the cryptos in there, but just have them backed up by fiat, and let that work as it is,” said Duffy in an exclusive interview at FIA’s International Futures Industry Conference in Florida earlier in March.
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Duffy, whose own exchange has listed Bitcoin futures contracts since 2017, said the focus within the crypto community is too often around the value of coins, as opposed to actual use cases.
“Once you get the use of it, the price will take care of itself,” Duffy said. “But the argument has gone only to the price of say Bitcoin or any other cryptocurrency. No one is talking about, ‘How do I use this asset?'”
The big issue these discussions raise is the need to involve regulators, who have kept the cryptocurrencies at arms length as they work to better understand them. Look no further than Bitcoin ETFs, which the Securities and Exchange Commission have declined to approve despite numerous proposals over the years. The lack of an exchange-traded note has led some to speculate it’s limiting the growth of the currency on Wall Street.
Duffy said the biggest thing giving regulators pause when it comes to crypto is its finite amount. A selling point of most cryptocurrencies is that there is a limited supply.
That’s a stark contrast to how traditional economies work in which governments can decide to print additional money at will. As a result, Duffy said the acceptance of using cryptocurrency would be a major leap.
“The governments can’t run unless they can run on a deficit,” Duffy said. “I am trying to figure out why they would say, ‘Sounds good to me, because I want to be responsible and run everything on even-for-even basis. I can’t borrow against anything.'”
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It’s a difficult gap to bridge, but one that’s unavoidable. Duffy said the only way for cryptocurrency to make more progress on Wall Street is to get the greenlight from regulators.
The Commodity Futures Trading Commission is currently reviewing a handful of cryptocurrency projects. Among them is Bakkt, a venture of NYSE’s owner Intercontinental Exchange aimed at building an ecosystem for digital assets that includes working with companies such as Starbucks and Microsoft.
“I do believe that the regulators right now are a little careful about just rubber stamping anything as it relates to crypto,” Duffy said. “You are going to have to have an offering that the regulators are going to have to get comfortable. And I think it is hard to get comfortable with something that is so new like this.
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