Alongside legendary investors like Warren Buffett, few other fund managers have seen as much success as Ray Dalio. The founder of Bridgewater Associates, which is one of the world's largest hedge funds, Dalio has become one of the most respected and listened to voices in the financial world.
While many billionaires, like Elon Musk, are bullish on Bitcoin, Dalio thinks the opposite. The hedge fund founder said this morning that he thinks Bitcoin could be banned by the U.S. government, following India's example. As bitcoin prices plummet in response to the news, should crypto investors be worried?
Ray Dalio and Bitcoin
This isn't the first time that Dalio predicted a U.S. ban on Bitcoin. In November 2020, the billionaire said that he thought governments would use every tool at their disposal to enforce a Bitcoin ban, just like the government outlawed gold ownership back in 1934.
Dalio doubled down on his Bitcoin prediction on March 25. Speaking in a Yahoo Finance interview, he said that every country wants to maintain its control over currency supply and demand. Since governments and central banks don't want other currencies to compete with their own legal tender, he thinks Bitcoin's rise in popularity could be a threat to fiat currencies.
Despite this, Dalio still gave Bitcoin its due credit. In an earlier blog post on Bridgewater's website, he said that Bitcoin is "one hell of an invention" and that its popularity is justified. It's just that he doesn't think it will stay around forever in its current form.
For most Western countries, the main concern surrounding cryptocurrencies is the lack of transparency. Some tokens, like Monero, pride themselves on privacy and being untraceable. Anti-crypto advocates have argued that these types of coins enable money laundering. On the flip side, pro-crypto advocates say that government control over our financial system has spiraled out of control and that cryptocurrencies are a way to regain some of our freedom.
Despite the initial restrictions, most countries have now reached a middle ground, mainly through AML (Anti-Money-Laundering) and KYC (Know-Your-Customer) regulations. This means that anyone wanting to sign up for a crypto exchange will need to input their personal details and a copy of their driver's license or passport.
While it's impossible to trace transactions from one digital wallet to another, these KYC regulations mean that governments can track whenever you deposit or withdraw any cash from your crypto exchange into your bank account.
Countries that have banned Bitcoin
Only a handful of countries have banned Bitcoin. India is the most recent and has the harshest stance. India prevets buying and selling crypto. Even having Bitcoin in your possession could lead to fines or jail time. That's harsher than China, which hasn't criminalized crypto possession. Other countries that have banned cryptocurrencies include Nigeria, Saudi Arabia, Bolivia, Algeria, and Nepal.
Is Ray Dalio right about banning Bitcoin?
His comments have already attracted a lot of attention and debate from people on both sides of the issue. Anthony Scaramucci, former White House communications director, tweeted that banning Bitcoin is impossible.
Currently, there isn't an indication that the U.S. plans to ban cryptocurrencies. From a political perspective, that would hurt the current administration's popularity, especially considering how divided the House and Senate are at this time.