According to the CEO of London-based cryptocurrency company Blockchain.com , a U.S. government default would cause a “pullback” in crypto prices at first, followed by a “push upward.”
If Congress does not lift a $31.4 trillion cap on government borrowing, the U.S. government might fall behind on its payments next month and potentially default on its debt, a failure that could cause economic disaster and panic on the world’s financial markets.
A U.S. recession or default would likely be detrimental to cryptocurrency in the short run. These are risky assets, and you want to reduce risk, said Blockchain.com CEO Peter Smith at the Bloomberg-organized Qatar Economic Forum.
“On a long horizon, these are probably good for crypto…If the U.S. government defaults, we’ll probably see a quick pull-back and then a very strong push upward in the crypto market.” The crypto currency 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 commercial centre Dubai.
“The (Dubai) government’s 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.