Cryptocurrency unlikely to face 'major regulation' from Congress, predicts billionaire investor

Cryptocurrencies like Bitcoin have become increasingly popular, particularly among a younger generation, but are unlikely to face major regulation from Congress, billionaire investor David Rubenstein told Fox News Digital. 

A 2013 New York Times article said Bitcoin "isn’t ready for popular consumption, and it may never be," calling it a "high-risk experiment."

Even a 2018 Vox article called the cryptocurrency the "greatest scam in history." 

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Yet according to Pew Research, 16% of Americans say they have traded, invested in or otherwise used a cryptocurrency, and nearly 90% say they have heard at least a little about cryptocurrency. 

While 16% is still much lower than the 56% of Americans who own stock, according to a 2021 Gallup survey, it is a drastic increase from the 1% who said they had collected, traded or used Bitcoin in 2015.

Rubenstein said the popularization of cryptocurrencies is not unlike that of other new and emerging technologies.

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"Anything that comes along when people don't really know what it is at the beginning - the Internet, e-commerce, Twitter, whatever it might be - it takes time for people to get used to it," he told Fox News Digital at the Milken Institute's 2022 Global Conference. "Now, cryptocurrencies are well known. They've been around for quite some time, more than a decade."

Rubenstein attributed the widespread acceptance of cryptocurrencies to a younger generation investing.

"I think people who are younger tend to feel it's a good investment or good to own some of it," he said. "Many younger people think that people in my generation have managed to devalue the currency or have borrowed so much money that the currency isn't worth what it's supposed to be worth." 

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Nicole Valentine, FinTech Director of the Center for Financial Markets at the Milken Institute, told Fox News Digital the move toward cryptocurrencies and FinTech has been spurred by Millennials and Gen Z. 

"Millennials and Gen Z are the influencer generation, and they’re also the social generation, the community generation, and it just makes sense that now they’re the crypto generation," she said.  "And so, with respect to FinTech, the digital demand, the digitized demand in FinTech is coming from the Millennials and Gen Z." 

Rubenstein told CNBC he is invested in companies that service the cryptocurrency industry because they are "here to stay," but that he does not own any cryptocurrencies himself. 

Rubenstein told Fox News Digital he has not bought cryptocurrencies outright because his advisers think you "cannot easily pick between one currency and another." 

"You’re better off to do things that will service the entire industry," he said.

Despite the increased popularity of cryptocurrency in the United States, the industry faces relatively few regulations. Both Federal Reserve Chairman Jerome Powell and SEC Chairman Gary Gensler have spoken out about the need for increased regulation of the industry.  

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At the Aspen Securities Forum in August, Gensler said the SEC has "taken and will continue to take our authorities as far as they go." 

"We need additional congressional authorities to prevent transactions, products and platforms from falling between regulatory cracks. We also need more resources to protect investors in this growing and volatile sector," he said.

Powell said in March that existing regulations were "not built with a digital world in mind."

"Stablecoins, central bank digital currencies, and digital finance more generally, will require changes to existing laws and regulation or even entirely new rules and frameworks," he said.

But Rubenstein predicted it would take a "gigantic loss" or "big scandal of some type" for major regulation to disrupt the industry.  

"I think if the U.S. government said it was going to increase regulation - it's talked about it for some time - you're likely to get a firestorm from Congress," he said. "Congress has a lot of people who seem to like cryptocurrencies, or at least they are close to the people who like cryptocurrencies, and I suspect you'll find a lot of resistance from Congress."

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In March, President Joe Biden issued an Executive Order on "Ensuring Responsible Development of Digital Assets," which "[addressed] the risks and [harnessed] the potential benefits of digital assets and their underlying technology."

Valentine said, based on Biden’s executive order, there would be potential government regulation of digital assets, and the industry wants "clarity around regulation."