Bitcoin Price Raises Above $8000 After CFTC and SEC Cryptocurrency Senate Hearing

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by Bhushan Akolkar · 4 min read
Bitcoin Price Raises Above $8000 After CFTC and SEC Cryptocurrency Senate Hearing
Photo: Marco Verch / Flickr

The heads of both the institutions sounded much positive on the Blockchain technology and talked about the need of regulatory approach while dealing with cryptos.

After all the heavy correction in the market starting earlier this week, there is finally a moment of glee for investors and crypto enthusiasts. The markets have recovered sharply in the past 24-hours from yesterday’s fall below $300 billion market cap, and Bitcoin slipping down way past $7000 and going almost close to $6000 levels.

The crypto markets have added nearly $100 billion valuations in the last 24-hours as Bitcoin strongly surges above $8000. At the press time, Bitcoin is currently trading for $8114.54, according to the data on CoinMarketCap.  The fresh optimism in the market after chairperson of Commodity Futures Trading Commission (CFTC), Christopher Giancarlo, and the chairman of the Securities and Exchange Commission (SEC), Jay Clayton, addressed the Senate Banking committee while discussing cryptocurrencies, the need for its regulatory measures, ICOs, and other Bitcoin investment products like derivatives and exchange-traded funds (ETFs).

Praising the Blockchain Technology

The heads of both the top financial institutions shared a common opinion regarding the potential of Bitcoin underlying Blockchain technology. CFTC chairman, Mr. Christopher Giancarlo also said that we need to have a measured approach while dealing with cryptocurrencies and digital currencies cannot be completely ignored or snubbed off. “We owe it to this new generation to respect their enthusiasm for virtual currencies, with a thoughtful and balanced response, and not a dismissive one,” Giancarlo said.

He further added that “It’s important to remember that if there were no Bitcoin, there would be no distributed ledger technology. Virtual currencies mark a paradigm shift in how we think about payments, traditional financial processes, and engaging in economic activity. Ignoring these developments will not make them go away, nor is it a responsible regulatory response.”

On the other hand, SEC Chairman Jay Clayton sounded a little less excited about cryptocurrencies, however, he hinted that their role in the modern financial system cannot be ignored. Clayton said: “To be clear, I am very optimistic that developments in financial technology will help facilitate capital formation, providing promising investment opportunities for institutional and Main Street investors alike. From a financial regulatory perspective, these developments may enable us to better monitor transactions, holdings and obligations (including credit exposures) and other activities and characteristics of our markets, thereby facilitating our regulatory mission, including, importantly, investor protection.”

Both the heads expressed concern on the fact that the cryptocurrency exchanges are currently being regulated only at the state level and there is a need for them to be brought to the federal level.

Bitcoin’s Volatility Not That Surprising or Concerning

In addition to the regulatory approach, when both the heads were asked their views on the volatile nature of Bitcoin and cryptocurrencies in general. Mr. Giancarlo, chairman of CFTC which regulates derivatives said that Bitcoin’s volatility is not in par with the VIX which is the commonly referred to as the “fear index”.

He said: “Bitcoin’s volatility was not as large as other asset classes like [the] VIX. We have seen extreme volatility in bitcoin but in our world [commodities], we are used to volatility in asset classes.”

SEC Chairman, Jay Clayton, while commenting on the volatility issue said: “I don’t really know what’s driving volatility in bitcoin and cryptocurrencies. [Cryptocurrencies are] not correlated with sovereign currencies, so it must be something different than what would move the dollar. But that’s one of the issues before us – there does appear to be a lot of volatility compared to the medium they are supposed to be replacing.”

Recognizing ICOs as securities and separately from Cryptocurrencies

There has been a long-time discussion with many analysts saying that ICOs need to be recognized as securities. Moreover, ICOs have been found to be quite vulnerable, off late. A recent study by Ernst and Young showed that almost $400 million was lost in ICO hacks and in fraudulent proposals last year.

Mr. Clayton also sounded critical and unhappy on the existing state of ICOs. He said “I’m very not happy that people are conducting ICOs when they should know they should follow the private placement rules. I want to go back to separating ICOs and cryptocurrencies. ICOs that are securities offerings, we should regulate them like we regulate securities offerings. End of story.”

Clayton also appreciated Facebook’s latest stand to ban crypto or ICO ads on its platform by saying: “I do want to recognize that recently social media platforms have restricted the ability of users to promote ICOs and cryptocurrencies on their platforms. I appreciate the responsible step.”

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