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Earlier this month, Fidelity Digital Assets, a division of Fidelity Investments, released a report on cryptocurrency developments and their possible future implications. The adoption of cryptocurrencies by sovereign nations is one of the topics covered in the paper.
“This past year saw some major moves by world governments with regards to digital assets,” Fidelity described.
The report discusses countries like China that have banned cryptocurrency and countries like El Salvador that took the opposite approach and made BTC legal tender.
“We think the two developments observed this year couldn’t be more opposed. Time will certainly tell which path is more successful,” the report authors discoursed. Though, they noted: “An outright ban will be difficult to achieve at best, and if successful, will lead to a significant loss of wealth and opportunity.” The authors continued, “We also think there is very high stakes game theory at play here, whereby if bitcoin adoption increases, the countries that secure some bitcoin today will be better off competitively than their peers,” expounding: “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.” Fidelity illuminated, “In other words, a small cost can be paid today as a hedge compared to a potentially much larger cost years in the future.” The investment firm established: “We, therefore, wouldn’t be surprised to see other sovereign nation states acquire bitcoin in 2022 and perhaps even see a central bank make an acquisition.”
Last week, El Salvador's president, Nayib Bukele, projected that two more sovereign countries would embrace bitcoin as legal cash this year. Nigel Green, the CEO of deVere Group, is more positive. Three more nations are expected to embrace BTC as legal cash this year, according to him.