Kraken's CEO said he feels the US is more "shortsighted" than other nations and "susceptible" to the bribes pressures from the banks that stand to lose from crypto becoming a big deal.
Powell said that fortunately, it might be too late for that as the "genie's out of the bottle and just trying to ban it at this point would make it more attractive. It would certainly send a message that the government sees this as a superior alternative to their currency".
Nevertheless, Kraken fears that governments around the world may start to clamp down on the use of bitcoin and cryptocurrencies.
"I think there could be some crackdown. Cryptocurrencies have surged in value lately, with bitcoin hitting a record high price of more than $61,000 last month. The world's most valuable digital coin was last trading at around $60,105."
A recent anti-money laundering rule proposed by the US government would require people who hold their crypto in a private digital wallet to undergo identity checks if they make $3,000 or more transactions.
"Something like that could hurt crypto and kind of kill the original use case, which was just to make financial services accessible to everyone", Powell said.
Cryptocurrencies like bitcoin have often been associated with illicit activities due to the fact that people transacting with it are pseudonymous -- you can see where funds are being sent but not who sent or received them. "I hope that the US and international regulators don't take too much of a narrow view on this", Powell said. "Some other countries, China especially, are taking crypto very seriously and taking a very long-term view."
However, founder of deVere Group CEO Nigel Green said that Bitcoin investors should be braced for – but not put off by – "much greater government scrutiny".
"Governments, central banks and regulators will be keen to protect the current status quo. We should expect considerably higher levels of regulation in the crypto market. Indeed, I believe it is inevitable."
Green said that the likelihood of greater government scrutiny shouldn't put off Bitcoin investors.
"Major draconian clampdowns are unlikely as digital currencies are increasingly regarded as the future of money – even by traditionalists.
"Indeed, proportionate regulation should be embraced. It would help protect investors, shore up the market, tackle criminality, and reduce the potential possibility of disrupting global financial stability, as well as offering a potential long-term economic boost to those countries which introduce it."
He said: "The Coinbase IPO underscores that cryptocurrencies in some form or another are here to stay – and the market is only set to grow. Because of this, investors should know that regulation will become a greater priority."