‘Bitcoin Can Fix This’ Is Not the Moral of the Story

Welcome to Bloomberg Crypto, our twice-weekly look at Bitcoin, blockchain and more. If someone forwarded this to you, sign up here. In today’s issue, Michael P. Regan looks at Bitcoin from both sides:

I have not come to bury Bitcoin

Efforts by the U.S. and its allies to expel Russia from the financial system offer one of the best-ever use cases for cryptocurrencies – and one of the biggest existential threats the asset class has faced.

First the use case: The “Bitcoin fixes this” crowd has long held that crypto is a way to skirt this type of financial “censorship” that has decimated the ruble and put overseas assets at risk for both the Russian government and its wealthy citizens. What’s the existential crisis? It’s the same answer.

The extent to which oligarchs or even run-of-the-mill Russians are rotating into crypto en masse to avoid the financial Armageddon that Vladimir Putin incited — and whether that’s influenced the recent rally — is hard to say. Yet that plotline speaks directly to a preeminent talking point of the crypto faithful. And while the rally may or may not have been directly caused by an influx of Russian money, traders front-running that potential scenario certainly played a huge role.

That’s a big public-relations problem either way. And the warm-and-fuzzy stories about Ukraine soliciting crypto donations aren’t enough to countervail it. In fact, they could make it worse. Imagine if instead it was the Taliban or Hezbollah making headlines for doing the same.

Doom-surfing through cable news Monday night, I came upon Hillary Clinton talking to Rachel Maddow about how the war has brought urgency to the need for a regulatory crackdown on crypto and its threat to the dollar as a reserve currency. That threat has long been a dream of some crypto aficionados. Yet with Russia on high nuclear alert, and Western governments leveraging control of the fiat-financial system as their best hope of pacifying Putin, it may end up being a matter of being careful what you wish for.   

Charting it out

Hearing them out:

A crypto billionaire's perspective on the impact of the crippling sanctions imposed on Russia by the U.S. and its allies

"We've never had a group of nations in essence confiscate real estate from Russian tycoons, taking a country's money ... That's why Bitcoin was created, because people don't trust governments.

This is a big deal -- in a lot of ways, this is starting the acceleration of de-dollarization of the world."

Mike Novogratz

CEO and founder of crypto platform Galaxy Digital 

What we’re reading (and writing):

• Bitcoin’s Stock-Defying Rally Powers Up the Narrative Engines
• Crypto Poker Is What Everyone Is Doing in the Metaverse
• Wall Street Takes Lead in Crypto Investments (Wall Street Journal)
• The Crypto Revolution Is an Existential Crisis for Gamers
• Crypto Isn’t Sanctions Haven Its Jump Suggests (Bloomberg Opinion)

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