Fed to release CBDC review paper; Kevin O'Leary says Fedcoin is not going to happen
As the Federal Reserve prepares to launch a paper reviewing the U.S. central bank digital currency (CBDC), colloquially known as the Fedcoin, investors are speculating as to when it will be released and what its release will mean for the rest of the cryptocurrency market.
Kevin O’Leary, investor, venture capitalist, and star of the reality TV show Shark Tank, says that a Fedcoin, in the purest sense of the word, is unlikely to ever happen.
Speaking to Michelle Makori, editor-in-chief of Kitco News, O’Leary said that stablecoins pegged to the U.S. dollar or another anchor, fiat currency, could operate in the same way as a central bank digital currency, and all the government needs to do is regulate stablecoin issuers like banks.
“I think that you and I will still be talking about this 20 years from now. I think what’s more likely to happen is that they will regulate issuers of stablecoins as banks,” he said. “That would be a good outcome. I would be OK with that too. The idea that the Fed itself issues its own stablecoin, I actually don’t think they’re set up to do that, they don’t have the infrastructure yet, doesn’t mean they couldn’t do it.”
O’Leary added that innovations in capital markets need to come from the private sector, not the Fed, which is not an entrepreneurial enterprise but rather, a regulator.
“The amount of innovation, and the deals that I see now, all the ideas that are coming out of decentralized finance, I never expect the governments to deliver that. I expect somebody sitting in a basement, dreaming that up,” he said.
O’Leary’s comments come as the Fed is working with crypto experts, including researchers from the Massachusetts Institute of Technology, to release a technical paper on how the Fedcoin might work.
According to the Wall Street Journal in an article from earlier this week, “The Fed plans to launch the review by releasing a paper analyzing the issue and seeking public comment, but it is unlikely to include a firm policy recommendation.”
O’Leary, who was previously a skeptic and critic of cryptocurrencies, has since changed his stance and diversified his investments into Bitcoin, altcoins, and DeFi protocols, as well as crypto-related companies like WonderFi, Immutable Holdings, and Sam Bankman-Fried’s FTX.
He now considers cryptocurrencies an indispensable part of his portfolio, going as far as to say it is as important to an investor as a sector of the S&P 500.
“I'm now viewing cryptocurrencies and decentralized finance, so-called DeFi, as the 12th sector of the S&P 500. Nobody has decreed that yet, but I'm doing it in terms of how I manage my own operating portfolio,” he said.
Aside from Bitcoin, O’Leary is also invested in Ethereum, Solana, and “all kinds of blockchain level-twos.”
For more information on how environmental, social and corporate governance (ESG) principals are influencing crypto mining and investing, watch the video above. Follow Michelle Makori on Twitter: @MichelleMakori (https://twitter.com/MichelleMakori).