Regulation is Good For Virtual Currency

February 12, 2018

“If I had asked people what they wanted, they would have said faster horses.” – Henry Ford

Creating and Leveling the Playing Field

Every big industry has benefitted from regulation throughout the 20th century.  The automobile industry, airline industry, food industry, manufacturing industry, and agriculture industry went through major regulation spurts borne out of a need for consumer safety and protection. So in the financial services industry, regulation on Virtual Currency (VC) should not be viewed as a negative, but as providing legislation, safety, and security that will allow new investors who are waiting on the sidelines to enter into the space.  After the Senate Banking Committee hearing last week, both CFTC and SEC have acknowledged VC as an alternative currency that will soon have a legitmate role in our monetary system.  Both agencies have the back of respectable coins and are looking to promote growth and development for it. As of now, they are still classifying VC as to whether it will be a commodity, a security, or a currency.
The most important statement from the Congressional Testimony:
“This simple approach is well-recognized as the enlightened regulatory underpinning of the Internet that brought about such profound changes to human society. During the almost 20 years of “do no harm” regulation, a massive amount of investment was made in the Internet’s infrastructure. It yielded a rapid expansion in access that supported swift deployment and mass adoption of Internet-based technologies. Internet-based innovations have revolutionized nearly every aspect of American life, from telecommunications to commerce, transportation and research and development. [“Do] no harm” was unquestionably the right approach to development of the Internet. Similarly, I believe that “do no harm” is the right overarching approach for distributed ledger technology.”   –   J. Christopher Giancarlo, CFTC Chairman

Where Are We Now?

With perceived uncertainty in BTC/USD the risk off trade has been priced in here. It’s an expected phase since VC markets are new and forming. Virtual currency still solves huge problems that paper currency has and the utility for it has already been established. This is just the beginning for cryptocurrency and regulation will legitimize the crypto markets and validate it as a solid asset class.  It will allow 300 million people in the U.S. who don’t own Bitcoin to feel confident now that exchanges are becoming safer to participate in.  The organization that is forming now will open the gates to attract heavier institutional buyers who will likely iron out the recent volatility.  This will in the upcoming months promote upward buying pressure and drive BTC markets higher.

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