The markets were watching Giancarlo closely to try and gain insight into how US policymakers are set to approach regulation of the cryptocurrency space. As with the traditional financial and economic policymaking world, this event is one which traders watch and trade their interpretation of what has been said. Therefore, if Giancarlo’s comments are seen as positive, it could be an inflection point for the crypto markets and could finally bring about a bottom to the recent crash.
First thing to say without any doubt is that he ‘gets it’. He said don’t dismiss bitcoin for blockchain:
“Its important to remember that if there was no bitcoin, there would be no blockchain or distributed ledger technology.”
This is the complete opposite of what many commentators from the banking world have been saying for years. He also stated that the CFTC intends to take the same approach that regulatory bodies took to the internet in its early days:
‘”Do no harm’ was unquestionably the right approach to the development of the Internet. Similarly, I believe that do no harm is the right overarching approach for distributed ledger technology.”
Regarding cryptocurrencies specifically, that the chairman went on to say:
“Virtual currencies, however, likely require more attentive regulatory oversight in key areas, especially to the extent that retail investors are attracted to this space.”
A summary of what he said:
His kids were not interested in stocks but are hooked onto cryptocurrencies, and the government has to respect that, and develop a positive outlook.
While scams and fraudsters must be cracked down, the general market must be allowed to develop. A working group of SEC, FINCEN, CFTC and other group members are working on identifying scams in this space.
When asked if Crypto has any “intrinsic value”? He replied that there is an intrinsic value and relation of the value of bitcoin and the cost of mining it.
Price of Bitcoin is just one publicly traded company like McDonalds. In comparison, global money supply is 7.6T. And since Bitcoin has been compared to digital gold, value of all gold in the world is 8T.
He mentioned “HODL”! According to him it means “Hold on for dear life”.
“We must crack down hard on those who abuse our young enthusiasm for bitcoin and blockchain technology”
“We owe it to this new generation, to respect their interest in this new technology with a thoughtful regulatory approach.”
In the middle of all this Senator Brown was constantly bashing banks, a topic that was unrelated to the discussion. Apparently banks have had 80+ violations in the recent months.
Unlike many of the public statements on bitcoin and crypto in general there was no mention of drug dealing or money laundering, or terrorism mentioned in the proceedings.
Venezuela Petrocoin and Russia Cryptorouble (and North Korea) were discussed and they were seen as ways these countries could use crypto assets to skirt US sanctions. Though the SEC chair addressed that there was not much they could do, but are working with Feds and the treasury.
“illegal transactions” was discussed, and the steps taken to combat misuse of crypto.
Overall this was an incredibly bullish presentation and it does appear that the crypto market has reacted positively with the price of bitcoin reaching $7,800 (up over 7% on the day).