Notes

Cryptocurrencies, the necessity of an active approach to molding the blockchain ecosystem in the capital market

The CEO of Sepehr Saderat Financial Group reviewed the opportunities and challenges ahead regarding the position of the blockchain ecosystem in the capital market.

With introducing cryptocurrencies, Blockchain technology is one of the main paradigms of the global financial industry. Bitcoin is the first and most renowned cryptocurrency investment on which equaled almost 10% of the total value of gold in the world last year (Coin telegraph, 2021). Accordingly, the influence of cryptocurrencies and cryptoassets in Iranian society is quite great, as estimated in a field study by Ilia Company in 2020.

The lack of internal contexts and an active approach to shaping the crypto ecosystem will lead to capital outflows to external contexts.

The world, especially developed countries, has adopted a positive approach to cryptocurrencies and cryptocurrencies. Switzerland, for example, is known as the Crypto Valley in Europe since it loves cryptocurrencies and supports and accelerates blockchain projects to provide electronic services to its citizens (Bitcoin And beyond Book, 2018 and coin firm, Switzerland crypto regulations, 2021). South Korea, the world leader in cryptocurrencies, legislated clear tax laws in 2020.

Large businesses such as PayPal have also made it possible to buy from millions of cryptocurrency acceptors (Reuters, 2021). Tesla has invested $ 1.5 billion in Bitcoin (Entrepreneur, 2021).

The analysis of other countries shows that only by adopting a positive approach by the government can we obtain the consent of all stakeholders and ensure the benefits of forming the cryptocurrency ecosystem that will ultimately maintain and strengthen national or even international authority.

Examples of the government’s positive approach to people and businesses can be multifold, including the activities related to training, advocacy, legislation, and development (expansion of cryptocurrency development zones and related services).

Iran’s capital market can turn the threat into an opportunity to attract liquidity. Iran Stock Exchange can further explore these solutions:(especially OTC) concurrently with the world’s advanced stock exchanges implementing multiple operational solutions:

  • Establishing exchange traded funds (ETFs) (currently operational on the NASDAQ and NYSE)
  • Launching Derivatives Trading (options and Future contracts) on ETFs (Ontario Canada Securities and Exchange Commission is currently reviewing this implementation mechanism)
  • Initial public offering of shares of legal cryptocurrency mining companies (South Korean Stock Exchange is legislating this)
  • Allocating part of the portfolio of investment companies and stock exchange holdings to cryptocurrencies (Micro Strategy Co. is entering the U.S. stock market)
  • Trading cryptocurrencies in stock exchange markets (El Salvador has introduced bitcoin as the official currency, allowing for exchanging cryptocurrencies)
  • Launching private equity and venture capital funds specific to cryptocurrencies
  • Allowing for purchasing stocks and securities with cryptocurrencies (this idea has been proposed and examined by the U.S. Securities and Exchange Commission (SEC))

The above proposals aim to convert a threat into an opportunity. However, what matters now is that it is significantly easier to manage the current demand for cryptocurrencies now than in the future.

 

Khodadad Gharibpour

Managing Director of Sepehr Saderat Financial Group and Chairman of the Board of Sepehr Energy Holding

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