CK Cheng, the co-founder of ZX Squared Capital, believes the next crypto bull market will come from regulatory clarity in the United States, which could be as early as 2023. He said some of the regulatory efforts underway in the US will open the doors of traditional finance to crypto.
Cheng highlighted the recent seachange in traditional institutions’ stance toward crypto. BlackRock partnered with crypto exchange Coinbase in August to provide its institutional clients access to Bitcoin and crypto through Coinbase Prime. And some major players in finance teamed up, more recently, to create a digital assets exchange serving institutional and retail investors. This is being backed by financial giants like Citadel Securities, Charles Schwab, and Fidelity Digital Assets.
The former head of valuation risk at Credit Suisse said there are a lot more financial institutions getting involved in the crypto space. There is tremendous interest. Cheng pointed out that there are many more waiting for regulation in the US to be further clarified. He says it will really open the door for traditional financial institutions, and bring a lot more institutions and investors into the space. And this is how the next bull run will start.
Cheng said the Executive Order from US President Joe Biden has been a major signal for traditional investors. But he added that the devil is in the details when it comes to how crypto trading will be regulated, and whether a cryptocurrency will be considered a commodity or a security. It will give institutional investors a very clear path to see they don’t scramble into regulatory issues. Cheng expects regulatory clarity to be fleshed out early in 2023 and there will be more concrete. Regulation will help the market in terms of sentiment and in terms of people’s perception.