Bitcoin Faces Regulatory and Operational Hurdles as Reserve Asset: Nomura

Bitcoin could face great barriers to becoming a reserve asset, with regulatory uncertainty, operational demands, and limited supply among the key obstacles.

In a recent post-election roundtable hosted by Nomura, a global financial services group, panelists discussed the broad economic and market impacts of Donald Trump’s re-election, including Bitcoin’s potential role and the challenges it may face in achieving reserve asset status.

Nomura Panel on Post-Election Economy and Market

Under the new administration, Nomura’s panelists addressed regulatory and operational hurdles Bitcoin would face if considered for reserve status.

Greg Hertrich, Nomura’s Head of U.S. Depository Strategies, emphasized that regulatory uncertainty is a primary barrier, as there is no established framework to govern Bitcoin’s role in the financial system, particularly within U.S. banking structures.

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Hertrich further noted the operational challenges for banks in adapting to Bitcoin, including expanded compliance requirements.

He highlighted the need for enhanced anti-money laundering (AML) protocols, which would require banks to invest in specialized resources and skills to manage digital assets effectively within existing regulatory guidelines.

“U. S. banks are going to have to hire people to sort of do all of the anti-money laundering, Bank Secrecy Act, kinds of things that have been a significant cost for them just when it was being measured in dollars,” explained Hertrich.

Bitcoin’s Limited Supply as Reserve Asset

David Seif, Nomura’s Chief Economist for Developed Markets, discussed Bitcoin’s limited supply as another obstacle.

Seif pointed out that, unlike traditional reserve assets such as gold, Bitcoin’s constrained market size limits its practicality for large-scale reserve purposes, potentially making it unsuitable for major institutional adoption as a reserve.

“I think we’re a long way from Bitcoin being a reserve in any major way for any major economy. Even with Bitcoin having reached record highs, there’s not that much of it—less than two trillion dollars of it out there,” said Seif.

“That is a lot less than the amount of gold out there, which there’s not that much of either,” added Seif.