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Even though cryptocurrency prices have plummeted this year, Shark Tank star Kevin O'Leary is still bullish on the market. In a June interview, he said that he's not selling his holdings, and is actually buying more of some larger cryptocurrencies. However, he also stated that the current bear market is proof that legislation on cryptocurrency is needed.
For many enthusiasts, cryptocurrency and government regulations go together like oil and water. Cryptocurrency was originally designed as a currency that didn't require any sort of central authority, like a government or a financial institution. But O'Leary thinks legislation is exactly what the market needs.
Why Kevin O'Leary wants government legislation on crypto
O'Leary argues that cryptocurrency needs regulations because that will attract more institutional investors and help stabilize the market. Right now, he says cryptocurrencies are under-owned by institutions, which results in tremendous volatility. It's primarily retail investors buying through crypto apps and stock brokers.
While O'Leary says the market will bounce back eventually, he believes volatility is a given when crypto is unregulated. If there were government policies in place, that would lead to more large organizations investing in the top cryptocurrencies, such as Bitcoin (BTC), Ethereum, (ETH), Solana (SOL), and Polygon (MATIC).
Ideally, O'Leary is hoping for policy discussions on crypto after midterm elections. He'd like to first see policy on stablecoins, cryptocurrencies that attempt to follow the value of another asset, most often the U.S. dollar. That seems like a natural place to start, considering investors just lost massive amounts of money with the recent collapse of the TerraUSD stablecoin.
Cryptocurrency regulations are a challenging and controversial subject
O'Leary is far from the only big investor who wants to see regulations on crypto, and it's easy to see why. The lack of rules in cryptocurrency can be problematic for investors of all sizes. There's insider trading, all kinds of cryptocurrency scams, and extremely high volatility.
Institutions have been slow to invest in cryptocurrency since it's unregulated. While they've been warming up to the idea over time, we'd likely see far more organizations buy cryptocurrencies if there were regulations in place. Regulations would also protect retail investors, many of whom have been victims of scams or projects that fail to deliver.
However, it's also easy to see why cryptocurrency enthusiasts would be against any sort of regulation. Decentralization has been a key part of crypto from the beginning, and government regulation goes against that ethos.
I understand the appeal of decentralization, and it's one of the things I like about cryptocurrency. But some type of regulation seems inevitable at this point. Governments have already taken steps to ensure that investors pay cryptocurrency taxes. The White House is planning to enact policies targeting crypto. It's likely not a matter of if, but when we see more stringent cryptocurrency regulations.
O'Leary is enthusiastic about the future of cryptocurrency
Not every crypto supporter will like O'Leary's calls for regulation, but most will be happy about his predictions for the future of the market. He believes that within the next 10 to 12 years, cryptocurrency and blockchain technology will be the 12th major sector of the stock market. That's quite the change of heart, as he used to be a vocal critic of cryptocurrency.
Cryptocurrency is still very new, and despite the recent bear market, it has a lot of potential. Even though the idea of regulating crypto is controversial, it's something that could bring in far more major investors and help the market grow.
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We're firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers. The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.Lyle Daly has positions in Bitcoin, Ethereum, and Solana. The Motley Fool has positions in and recommends Bitcoin, Ethereum, Polygon, Solana, and Target. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
