- A cryptocurrency crash will lead to "significant financial repercussions" or even the next financial crisis, according to Brett Heath.
- Heath is the CEO of the precious metals company Metalla Royalty & Streaming.
- He believes cryptocurrencies are leading to systemic risk amid widespread adoption and never-ending supply.
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Cryptocurrencies will lead to the next financial crisis, according to Brett Heath, the CEO of Metalla Royalty & Streaming.
In an interview with Kitco News on Thursday, Heath compared cryptocurrency adoption to financial crises of the past, arguing history may be repeating itself.
"When you look back to the last few decades and all of the financial crisis that happened, they all have a couple of things in common. And one of them is the mass adoption of a new financial product or a new technology that is not very well understood," he said.
Metalla Royalty & Streaming is a pure-play gold and silver streaming/royalty company that offers investors leveraged exposure to precious metals. The company was founded in 2016, trades publicly under the ticker "MTA," and is based out of Vancouver, Canada, according to data from Crunchbase.
In his Thursday interview, CEO Brett Heath noted that prior to the 2008 financial crisis, the markets adopted mortgage-backed securities and collateralized debt obligations. A lack of understanding and regulation surrounding these new financial instruments eventually led to a worst-case scenario.
"Once the public had embraced this new financial product, then it crashed. It was a huge problem that had repercussions throughout the entire world," Heath said.
The CEO believes history may be repeating itself when it comes to cryptocurrencies.
Heath also compared cryptocurrencies to the overvalued tech stocks of the dot-com bubble.
The CEO said there will be some winners in the cryptocurrency space long-term (as there were in the dot-com era), but most will eventually fall because they lack "intrinsic value." When this happens, it will cause "significant financial repercussions," according to Heath.
"This is the type of situation where it has the recipe to create a significant financial panic…When you have that amount of capital wiped out of digital wallets across the globe, you better believe there is going to be some significant financial repercussions that are felt," he said.
Heath added that, in his view, cryptocurrencies are a "license for the private sector to print money" and noted there is a never-ending supply of new digital assets.
The CEO argued cryptocurrencies don't have the rarity of other stores of value, pointing out that there are more than 10,000 coins, tokens, and other digital offerings currently on the crypto market, and more are coming every day.
Heath also took a shot at the top cryptocurrency, bitcoin, citing studies that show it takes two to three times the amount of energy to mine a dollar of bitcoin as it does to mine a dollar of gold. He argued new cryptocurrencies with better technology, and a reduced environmental impact will take market share from the crypto leader moving forward.
The CEO concluded by saying there's "no doubt" blockchain technology will "change the world," but he believes the endless supply of cryptocurrencies will hurt the space in the long run and may even lead to the next financial crisis.
Heath's comments come after bitcoin received some major-league support from the likes of billionaire hedge fund manager Ray Dalio recently.
Dalio revealed in an interview that he owns some bitcoin and believes the cryptocurrency will perform better than bonds in the current inflationary environment.
