The Irony of Regulatory Authorities’ Push for Bitcoin Custody in Partially Provisioned Banks

According to reports, Gabor Gurbacs, Director of Digital Asset Strategy at VanEck, an investment management company in New York, stated on social media that regulatory agencies are pushing for the custody of valuable fully provisioned bearer assets (such as Bitcoin) in partially provisioned banks (many of which are now bankrupt), which is highly ironic. Always question the statements of regulatory authorities and consider the views of long-term practitioners/asset owners.

Gabor Gurbacs: Auxiliary storage will become standard within 5-7 years

Introduction

Gabor Gurbacs, Director of Digital Asset Strategy at VanEck, has expressed his concern on social media regarding the regulatory agencies’ push for the custody of valuable fully provisioned bearer assets, like Bitcoin, in partially provisioned banks, many of which are now bankrupt. He finds it highly ironic and warns people to always question the statements of regulatory authorities and consider the views of long-term practitioners/asset owners. In this article, we will delve deeper into the issue and understand why Gurbacs and many others share his concern.

The Concept of Bearer Assets

Before we dive into the issue raised by Gurbacs, it is essential to understand the concept of bearer assets. Bearer assets are assets whose ownership is not recorded anywhere, and they are in the possession of whoever holds them physically. Examples include cash, gold, diamonds, and Bitcoin. These assets are sometimes considered valuable because they can be used anonymously, making them valuable to money launderers, tax evaders, and others with a vested interest in secrecy.

Quest for Bitcoin Custody by Partially Provisioned Banks

Regulatory authorities, in their quest to curb illicit activities associated with bearer assets like Bitcoin, are pushing for their custody in partially provisioned banks. However, this move has been met with mixed reactions in the financial industry. While some regulators see it as a way of reducing the risks associated with these assets by entrusting them to regulated banks, others view it as fraught with danger.

The Irony of it All

The irony of the regulatory authorities’ push for Bitcoin custody in partially provisioned banks is evident in two ways. First, if these banks are to act as custodians of these valuable assets, there is a need for them to be fully provisioned and financially stable. Otherwise, the assets will be at risk of being lost or stolen, which could result in significant losses for their owners.
Secondly, when it comes to Bitcoin and other digital assets, the need for decentralization and anonymity are core tenets of their existence. Entrusting them to regulated banks could lead to a loss of these characteristics, thereby defeating the purpose of their creation. It is, therefore, highly ironic that regulatory authorities are pushing for the custody of these assets in a way that goes against the very principles that underpin their existence.

The Need for Caution

Gurbacs’ warning to always question the statements of regulatory authorities is not a call to ignore regulations altogether. Instead, it is a reminder that regulations and their implementation should be done in a way that does not go against the values, principles, and purpose of the assets they seek to regulate. The push for the custody of Bitcoin and other bearer assets in partially provisioned banks is one that requires caution and careful consideration.

Conclusion

In conclusion, the regulatory authorities’ push for Bitcoin custody in partially provisioned banks is highly ironic, given the principle of bearer assets and the need for decentralization and anonymity. It is essential to question these statements and ensure that the regulations and their implementation align with the assets’ core values, principles, and purpose.

FAQs

1. What are bearer assets?
Bearer assets are assets whose ownership is not recorded anywhere but are in the possession of whoever holds them physically. Examples include cash, gold, diamonds, and Bitcoin.
2. Why are regulatory authorities pushing for the custody of Bitcoin in partially provisioned banks?
Regulatory authorities are pushing for the custody of Bitcoin and other bearer assets to reduce the risks associated with their anonymous and decentralized nature.
3. What is the problem with entrusting Bitcoin to partially provisioned banks?
Partially provisioned banks are not financially stable and may result in significant losses when entrusted with valuable assets like Bitcoin. Additionally, this move goes against the core principles of decentralization and anonymity that underpin the creation of Bitcoin.