Crypto is a ‘different kind of animal’ for lawmakers seeking to regulate: BitBoy Crypto Founder

BitBoy Crypto Founder Ben Armstrong joins Yahoo Finance Live to discuss the price action in cryptocurrencies like bitcoin, impacts from the Russia-Ukraine conflict and sanctions, central bank digital currencies and stablecoins, federal regulations for crypto, and real estate.

Video Transcript

All right, everyone, welcome back to “Yahoo Finance Live.” Bitcoin jumped above 47,000 in this afternoon’s trading. For more on what’s behind the surge and where it’s headed, let’s bring in Ben Armstrong, “BitBoy Crypto’s” founder. Welcome to the show. So, first of all, what do you see as the key drivers of this rally that we’re seeing, and where does Bitcoin go from here?

BEN ARMSTRONG: Well, I think what we’re seeing is, we’re finally seeing the fundamentals of Bitcoin. Some of the on-chain metrics are aligned with the price. When we look at the hash rate for Bitcoin mining, for example, that has usually been a good indicator of tops of markets. Usually as the hash rate climbs, the price climbs. But, yet, lately, the hash rate hit all time highs and the price was, was sinking.

We’re also looking at huge amounts of Bitcoin Ethereum flowing off of exchanges which decreases the liquidity, which you know, is leading to some price surges. Then, of course, I think here in a few, we might talk about the Russia Ukraine situation. I think that is definitely helping the price. You know, bad for the world, but people are learning that you know, when it comes to their money, that there’s a lot of control and overreach going on and people are turning to digital assets.

And so this additional kind of backup store of currency, or use mechanism for currency, how much of that do you believe to be derived solely from the Russia Ukrainian war and conflict that we’ve seen play out?

BEN ARMSTRONG: Well, there’s a lot of it’s– I’ve been in crypto, I’ve been in Bitcoin since 2012. And a lot of people have been in crypto since it was a libertarian movement. And it was basically, like, I don’t want the banks controlling my money. I want control over my money. Some of us resonated with that message very early. A lot of people, they’re just comfortable with their banks. There was a recent survey that said 60% of people, you know, would be interested in purchasing crypto from their bank. But yet, the banks tend to be not our friends when it comes to overreach and control.

So, because of that, and what we’re seeing with sanctions in Russia, people are starting to understand that your money should not be weaponized against you. And that’s what we’re seeing across the board, you know, from sanctions against Russia. You know Russia’s, you know, forcing some types of controls on Ukraine right now. So because of all that, people are learning this is the only way to truly take ownership of your money is to get in crypto. And, of course, you have the store of value. It’s a hedgeable asset. There’s all kinds of upside to Bitcoin that we’re seeing counterbalance all the downsides to fiat currency.

You talk about the situation in Ukraine. But here, we have the recent story of Goldman Sachs opening the door. Congress appears to be coming around and the regulatory environment seems to be opening up. How much of the environment here and regulatory possibility is driving this?

BEN ARMSTRONG: Well, I think people are waking up. Like, this is not going anywhere. For those of us inside the industry it’s just been amazing to us to watch the development. And yet, the average person out there was still like, oh, crypto could be a scam. Like, no, this is a multi-trillion dollar industry. It’s only going to be growing over the next several years. This is the new level, the new layer to the internet, basically, with blockchain. And the government understands they can’t control it. They’ve got to do their best, you know, the best that they can possibly do to institute some types of regulation and control.

But at the end of the day, you know, crypto is a completely different animal than what we’ve seen, you know, with previous iterations of money. And because of that, the government is trying to figure out now, OK, we’ve really crowded up here. We don’t want to stifle innovation. We’ve got to figure out who’s going to be in charge of what. That’s what the executive order a few weeks ago, or about a month ago, was about, because they’re looking at, you know, Gary Gensler from the SEC, how badly he’s botched up the SEC XRP case or SEC Ripple Labs case.

We’ve seen how much he’s botched up several other cases and the government doesn’t have a lot of faith in the SEC to solve a lot of these problems. So, you know, it’s one of those things where they’re finally taking notice of crypto and understanding that this is not going anywhere.

OK, and so, in any case here, it still sounds like you believe that the government agencies’ regulators would still need to look towards either a federal bank, in the Federal Reserve, and how they would look at CBDCs, Central Bank Digital Currencies , or how the existing banks themselves, who have already offered, or at least kick the tires, on what, in JP Morgan’s case, would be a JPM coin, how that would be received by the market. Do you believe they push further into that type of ethos where they go back to launching their own digital currency? Or do they then buy into the existing major coins and offer those directly to clients?

BEN ARMSTRONG: Well, that’s going to happen for sure. I mean, the banks are definitely going to be offering crypto services and being a vehicle for people to get invested. I said earlier 60% people are interested in this. I did a street video, several years ago on my channel, to where I went and talked to people about crypto, about Bitcoin, and so many of them said, well I would do it if my bank allowed me to. They’re so used to the online banking platforms. And I think that is definitely something the banks are going to do. It’s going to be profitable for them.

I think with stablecoins, everything is such a wild card right now, because the regulation that we’re going to get down the pipeline on crypto is going to be stablecoin specific. We’re going to get a lot of regulation, I believe, over stablecoins. One thing I could see happening, as each bank creates its own kind of internal stablecoin that’s used for trading on its platform, but, you know, I ultimately believe that we’re going to see the USDC, the US Coinbase dollar, eventually become the federal digital dollar. And then when that happens, you know, I believe we’re going to see, you know, all bets are off on stablecoins.

And as we look at other parts of the economy, in your notes you talk about the real estate markets cooling down, leading to fear of a violent housing pullback. How does crypto play into that? And are there are certain altcoins that are better than others in order to really take advantage of that?

BEN ARMSTRONG: Yeah, I think when it comes to real estate, everything is such, is such a mystery right now why the market just keeps climbing. But I think a lot of it is when you look at BlackRock coming in, buying a lot of, you know, houses way above, I guess, you know, sticker price, so to speak, or listed price, they’re really driving the market-up. And it’s, it’s really extremely overheated in my opinion. Your real estate people aren’t going to tell you. This your real estate, your Realtor, and, you know, no offense to Realtors, but they’re going to tell you, oh, it’s a great time to buy, because they need people to buy houses. That’s their entire business.

But, like, we’re already over the amount of new homes being built right now than we were in the 2008 financial crisis or what led up to that. So, you know, when it comes to crypto, I would say right now crypto is a great investment. Real estate is a great investment. I think that, in general, over time, they don’t make any more land outside of a couple of islands they made in China. But I think that what you have to do is diversify your portfolio.

The biggest bang for your buck, in all assets right now, I do believe, is in altcoins. We suggest creating a balanced portfolio of altcoins that is going to, you know, Ethereum, Cardano, XRP. Those are the big ones you definitely want in that portfolio. You don’t want to be going to the bottom of coin research sites and finding something that somebody tells you that’s going to 1000X or whatever. You know, you’re much better off having a diverse– diversified portfolio with some of the top coins in it.

Certainly good to here because, obviously, a new coin seems to be popping up every day. Thank you, as always. Ben Armstrong, there “BitBoy Crypto’s” founder. Thank you for joining us. Well, President Biden is standing by his comments–

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