Tim Draper, an early investor in tech companies like Skype and Tesla (TSLA), reiterated his distrust in the existing financial system and belief in decentralization and deregulation.
“Central bank always gets it wrong. When you’re in recession, they shove you further into a recession. When you’re in a boom, they push you higher in a boom because they move so slowly,” said Draper during a debate hosted by Intelligence Squared U.S. and Adam Smith Society on Saturday. “We’re ready for a new [financial system] — that system is not working.”
The long-time Silicon Valley venture capitalist and bitcoin evangelist argued that the current system where a third-party like banks “hold your currency” is antiquated compared to the revolutionary bitcoin. Cryptocurrency could eventually replace fiat money, according to Draper, but the regulatory environment makes it difficult.
“They add more regulations when you’ve already got both hands tied behind your back and you’re trying to feed your family,” said Draper about the government.
Not a dime in China
He also said poor regulation scares talent away, citing China as an example. Since September, some cryptocurrency and blockchain startups have moved out of the country as the Chinese government started cracking down on the industry.
While Draper was an early backer in China’s search giant Baidu (BIDU), he pulled his money out of China because of stricter rules on capital outflows. Individuals in China are not allowed to transfer more than $50,000 out of mainland China each year. This year, that rule was stepped up further with the capping of overseas withdrawals using China-issued bank cards at $15,800 (100,000 yuan) per year.
Draper also doesn’t approve of China’s President Xi Jinping strong leadership style. “As long as he is the president, I don’t want to invest a dime in this country,” he said on Saturday.
Draper foresees similar problems in the U.S., as the Securities and Exchange Commission creates “these huge dark clouds” by not having clear rules on cryptocurrencies. “We have a new currency. This thing is awesome, and your government is getting a little heavy-handed,” he said.
Despite his concern over regulation, Draper remains bullish on cryptocurrency. He predicts bitcoin (BTC) will reach $250,000 by 2022. “This is bigger than the internet,” said Draper, who bought nearly 30,000 bitcoin during the U.S. Marshals Service Silk Road auction.
Krystal Hu is a technology and economy reporter at Yahoo Finance. Follow her on Twitter