Blockchain.com CEO Says US Debt Default Would Hit Cryptocurrencies Initially

A US government default would trigger an initial pull-back from cryptocurrencies followed by a “push upward” the CEO of London-based crypto firm Blockchain.com said on Thursday.

The US government could fall behind on its bills next month – and even default on its debt – if Congress does not raise a $31.4 trillion (roughly Rs. 2,59,54,29,80 crore) cap on government borrowing, a failure that could trigger economic calamity and panic on global financial markets.

In the short term, “a US default or a US recession is probably bad for crypto. These are risk assets, and you want to take risk off,” Blockchain.com CEO Peter Smith said at the Qatar Economic Forum, organised by Bloomberg.

“On a long horizon, these are probably good for crypto…If the US government defaults, we’ll probably see a quick pull-back and then a very strong push upward in the crypto market.”

The cryptocurrency market has followed cyclical patterns and while 2022 was “quite painful”, it is recovering this year and 2024 will be “another exponential year”, Smith said.

Blockchain.com, which offers users a crypto wallet and is also a crypto exchange, is considering an expansion of its small Middle Eastern office in the commercial center of Dubai.

“The (Dubai) governments in a very healthy, consultative process with the industry and about regulations…I think so long as those end up where we think they will, we’ll probably be investing heavily in Dubai,” he said.

Last September, Blockchain.com signed an agreement with Dubai’s crypto regulator Virtual Assets Regulatory Authority (VARA) and has since opened an office and hired staff.

Currently, the company is investing most heavily to shore up operations in Singapore and Europe, Smith said. 

© Thomson Reuters 2023