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According to investment firm Fidelity, 2022 will be a year in which more countries purchase bitcoin and add the digital currency to their balance sheets as a means of remaining competitive.
Fidelity Believes More Nations Will Add BTC to Their Balance Sheets
This is a craze that was likely started by the Central American nation of El Salvador, which in the summer of 2021, stated that it would be the first country in the world to declare BTC legal tender. This meant that people could walk into any store or retail outlet and purchase items and services with bitcoin alongside USD, which is the fiat currency that El Salvador has long been dependent on.
The bitcoin agenda began prominently in September, and while the nation at first garnered heavy criticism, it appears that more governments are now warming up to the idea of at least owning bitcoin and keeping it stashed away somewhere in case of emergencies. Whether other nations will make it valid money remains to be seen, but for now, they acknowledge that it has value and can work as a possible hedge tool.
Fidelity explained in a statement:
If bitcoin adoption increases, the countries that secure some bitcoin today will be better off competitively than their peers. Therefore, even if other countries do not believe in the investment thesis or adoption of bitcoin, they will be forced to acquire some as a form of insurance.
The goal is to allegedly get involved in bitcoin early as a way of having an edge over other countries that choose to wait. Fidelity is also taking issue with countries like China, which has outright banned both crypto mining and transactions. The company explained that this is the wrong move to make and could put the country in a weaker or less-competitive position down the line. Fidelity said:
It isn’t surprising that we think an outright ban will be difficult to achieve at best, and if successful, will lead to a significant loss of wealth and opportunity.
One of the big positives – according to the investment firm – happening in the bitcoin space is the new regulatory strategy the U.S. is set to implement in the year 2024. With new laws and rules in place set to prevent bad actors from making a mockery of the industry, Fidelity is looking forward to seeing potential amendments and changes that will eventually make things even stronger over the next two years.
Why Regulation Is Important
The company said:
But what we think is most notable is that digital asset regulation becoming law is another milestone as the asset class comes of age and establishes itself. We therefore wouldn’t be surprised to see other sovereign nation states acquire bitcoin in 2022 and perhaps even see a central bank [engage in] an acquisition.