Crypto is 'Clearly Getting Mainstream Validation' - Citi

December 1, 2020 8:46 AM EST

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Citi analyst Ronit Ghose shared key insights from the bank’s conversation with Ajit Tripathi, an Executive Director at Binance, to discuss cryptocurrencies and the future of money.

Here are the key takeaways:

  • According to Ajit, PayPal’s decision to launch crypto trading helped over 300 million users globally get acquainted with cryptocurrencies. As a result of this and other similar initiatives, crypto is “clearly getting mainstream validation”. This year is seen as “a tipping point, marked by an acceleration in adoption, growing understanding and declining fear around the crypto-space.”
  • There is “a growing recognition” that traditional payment systems are not good enough. Ajit believes that the world is “gradually moving away from cash, cards and interchange fees, in his view, a more intelligent wallet and token system which does not rely on a patchwork of connections between different entities on a payment network.” This may yield a less-dominant U.S. dollar, better payment experience and higher customer demand.
  • Ajit believes that crypto’s best use-case is as a currency of foreign trade. Protecting a store of value, gamification of finance and creating an investable asset are also mentioned.
  • Given that mainstream crypto adoption is on its way, central banks and regulators have also shown a higher level of interest. “Ajit believes China's DCEP is likely the strongest business case for a CBDC as it can reduce heavy reliance on US$ across their trade partners (e.g. Africa) and compete against domestic third-party private players who dominate retail online payments,” Ghose wrote in a research note to clients. These are also some of the reasons why several regulators oppose crypto, as according to Ajit, they may not be able to control it.
  • Finally, Ajit believes tokenized gold and bitcoins share similar attributes, like control and ownership. He “sees tremendous growth potential (current aggregate market cap. of c.$478bn) and room for potential competition with the digital Yuan, as c.80% of all bitcoin mining as well as the top three bitcoin exchanges are located in China.”

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