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The top US portfolio manager at $2 trillion Amundi believes a regulatory storm is coming for cryptocurrency. He explains why bitcoin and ether won’t play a bigger role in the financial system in 10 years than they do now.

Crypto application.Nipitpon Singad/EyeEm/Getty images

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Cryptocurrencies and their blockchain technology have the potential to disrupt the financial system as we know it today, as they lessen the need for the traditional banking model and lower transaction costs.

But according to the top US portfolio manager and equities head for one of the biggest asset management firms in the world, they will never get the chance to do that — at least in the form that they exist today.

Marco Pirondini of Amundi Asset Management — which oversees $2 trillion in assets — told Insider that he believes the US government will move to regulate cryptocurrencies in a big way in order to protect the dollar's status, and that assets in the space, including bitcoin and ether, will not play a bigger role in the financial system in 10 years than they do today. 

"I don't see any state that is willing to lose control over its own currency in favor of these other currencies," Pirondini said during a June 10 phone call. "If [a cryptocurrency] is fundamentally existing outside of the framework of the government, I think they will really struggle to take off. And I think that the government will increase the legislation and the controls and will make them innocuous in time. Because government wants and needs control of the currency.

He added, "Can you imagine the US not in control of the monetary policy? You really believe that the US will accept to not control its monetary policy?"

The comments follow similar remarks from Amundi CIO Pascale Blanque, who said regulators would be forced to "stop the music" on bitcoin. After falling by more than 50% from its record high in April, the world's largest cryptocurrency was up 37% this year as of Monday afternoon.  

Pirondini said this regulatory storm has already begun around the world, highlighting that China has already taken steps to regulate the space and talks of regulation in the US are swirling in Washington. 

"The world of these digital currencies that live outside the rule I think is coming to an end," he said.

While he sees regulation hurting today's most popular cryptocurrencies, Pirondini said he thinks blockchain technology could end up being adopted by the US government and that a US dollar digital currency could come to fruition.

Regulation a negative?

Though Pirondini sees regulation as a potential negative for cryptocurrencies, many in the crypto world seem to welcome the prospect of regulation with open arms because it would legitimize the assets.

"I 100% believe that regulation is a great thing for the space," Aya Kantorovich, the head of institutional coverage at crypto trading platform FalconX, told Insider in May.

"It's not going to deter from any growth in the space, I should hope, and what we've seen in the new administration in the past is that there's been a lot more communication between the industry and the regulators back and forth, which I think is a really great sign."

Luke Lloyd, an investment strategist at Strategic Wealth Partners, told Insider in February that while he thinks regulation around bitcoin specifically would spook investors in the near-term, it would be a positive longer-term.

"Regulation would actually mean the government is acknowledging it and if they back it in anyway would help build more trust around it," Lloyd said. 

Still, he said in a message on Monday that he thinks there's a chance that smaller coins are outright banned. Bitcoin, however, is now too big for the government to completely shut down.

Ultimately, the type and severity of any regulation the US government places on cryptocurrencies will determine their future viability.

Countries around the world have taken different approaches to the digital assets so far. China has taken a hardline stance, banning banks from conducting business with bitcoin, silencing bitcoin social media influencers, and stopping bitcoin mining

Meanwhile, El Salvador last week became the first country to officially make bitcoin legal tender.

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