The price of Bitcoin and alternative coins have reacted positively to a hearing by the U.S. Senate Committee on Banking, Housing and Urban Affairs on cryptocurrency regulation. The Senate came to the conclusion that cryptocurrencies are here to stay.
The price of Bitcoin shot up from $6 000 over the weekend to over $7 700 on Wednesday morning (7 February 2018).
The event saw the Commodity Futures Trading Commission (CFTC) and the Securities and Exchange Commission (SEC) go head to head on how lawmakers should consider cryptocurrency regulation. Industry leaders touched on topics such as price volatility, market oversight and regulation of Initial Coin Offerings (ICOs).
What went down?
Christopher Giancarlo from the CFTC remarked that there were some shortcomings in the current system of state-to-state money transmitter licensure. He said this may leave gaps when it comes to the protection of investors and traders of virtual currencies. Giancarlo explained that new rules for cryptocurrency exchanges should “be carefully tailored to the risks posed by relevant trading activity and enhancing efforts to prosecute fraud and manipulation.” He called for a rationalized federal framework.
Jay Clayton from the SEC said that he is open to exploring whether or not “increased federal regulation of cryptocurrency trading platforms is necessary or appropriate.” Clayton supports policies being put in place to make the crypto space fair.
Both heads agreed to the fact that cryptocurrencies are here to stay.
What you need to know
Following the U.S. Senate hearing on the regulation of cryptocurrencies, this is what you need to know:
- The U.S. has a team of specialists and economists who are researching various aspects of the crypto industry and is making head waves to stop scams.
- Bitcoin is a commodity and not security. It was agreed upon that Bitcoin’s intrinsic value lies in its technology. Its value is not limited to its market demand.
- Progress in the crypto space could be hindered if strict regulations are enforced. Especially since cryptocurrencies and blockchains are related. “If there were no bitcoin, there would be no distributed ledger technology,” Giancarlo said.
- The crypto industry is still in its early stages and operates on a small scale. Therefore, the industry needs time to fully develop and then it will be decided if further regulations are called for.
- Apparently, the hacking of foreign exchanges does not fall under the jurisdiction of the SEC or CTFC.
- The Senate came to the conclusion that the crypto community is doing a good job at educating themselves about the risks associated with the industry.
Elsewhere in the world
The U.S. Senate’s recognition of cryptocurrencies is good news for the industry and investors. Especially after news that China banned all foreign exchanges and is looking at implementing more restrictions. Meanwhile, Japan recognizes Bitcoin as an official currency.
Following the good news from the Senate, the three biggest crypto exchanges – Coinbase, Bitfinex and Binance recorded a record daily volume trade for Bitcoin. It is expected that Europe may come to the same conclusion as the U.S. Senate and this could further strengthen the crypto industry.
How is the market reacting?
According to CoinMarketCap, the total market capitalization has increased to $352 billion from $276 billion on Tuesday, 6 February 2017. This is an increase of 25%.
The market is still 57% down from its record high that was $830 billion in January this year. When looking at the alternative coins, Litecoin increased with 15% whilst NEO increased by 50% in the last day.
In conclusion – Cryptocurrencies are here to stay
The positive remarks by the U.S. Senate is a step in the right direction for cryptocurrencies. It is clear that cryptocurrencies are here to stay and will revolutionize the world.