Summary
China, India, Russia and the United States are all racing to regulate aspects of the cryptocurrency space.
Bitcoin (BTC), Ripple (XRP), Ethereum (ETH), and most others have fallen dramatically throughout January as a result.
Cryptocurrencies are recovering as regulation starts to be viewed as an accolade rather than a burden.
Cryptos are here to stay, and 2018 is likely to be a good year overall!
When it comes to cryptocurrency, the hot topic of the day is regulation, and for good reason. Governments around the world have been holding meetings and making announcements left and right surrounding the regulation of crypto-assets. A few examples include:
China Bans Cryptocurrency
Recently, news broke that China, a country that has long been against cryptocurrency, gave a knockout punch to the industry. Ultimately, China has decided to eradicate the crypto-craze by blocking access to any website associated with cryptocurrencies or ICOs. So, in Mainland China, cryptocurrencies, news surrounding the crypto space, and anything else crypto is now inaccessible.
India Ban Fears Wane
Another big story that hit the cryptocurrency space recently surrounds India. In recent comments, India’s Minister of Finance, Arun Jaitley, used some pretty harsh words to describe his views toward crypto assets and how they were being used to fund fraud. Here’s what Minister of Finance Jaitley had to offer:
The government does not consider cryptocurrencies legal tender or coin and will take all measures to eliminate the use of these crypto-assets in financing illegitimate activities or as part of the payment system.
These statements led to a flood of news reports stating that India was likely to ban the use of cryptocurrencies and crypto-assets all together in the region.
United States Regulation Talks
In the United States, J. Christopher Giancarlo, Chairman of the CFTC, and Jay Clayton, Chairman of the SEC, appeared at a congressional hearing. During the hearing, the market cops testified to the Senate Banking committee with regard to cryptocurrency. Specifically pointing to the need for regulation in the ICO space. Shortly after, Clayton was quoted as saying:
I believe every ICO I’ve seen is a security.
Cryptocurrencies Take A Dramatic Dive In January
Due to the concerns surrounding regulation, January proved to be an overwhelmingly bad month for cryptocurrencies. Here’s what we saw from BTC, XRP, and LTC in the month:
- BTC – From January 1, 2018, to February 1, 2018, BTC fell from $13,328.26 to $9,030.22.
- XRP – From January 1, 2018, to February 1, 2018, XRP fell from $2.062 to $0.87.
- LTC – From January 1, 2018, to February 1, 2018, LTC fell from $225.27 to $140.4.
(Data courtesy of World Coin Index)
Unfortunately, the digital coins listed above weren’t the only cryptos that felt the pain in January. With regulation at the top of traders’ minds, declines hit across the board.
We’re Seeing A Recovery As Regulation Turns To Accolades
While the idea of regulation in the cryptocurrency space proved to be a cause for concern in the beginning of the year, as more and more news breaks, regulation is being viewed as a positive thing.
It all started with the congressional hearing I pointed to above. During this hearing, CFTC Chairman Giancarlo seemed to welcome the idea of cryptocurrency with open arms. While he did make it clear that the CFTC does not currently regulate the space, and that regulation was likely coming, he also validated cryptocurrency as a valuable asset. On top of that, Giancarlo pointed to the idea that the blockchain would make his job easier, offering the following:
“The CFTC can now obtain trading data and analyze it for fraud and manipulation… With Bitcoin futures we’re now having visibility into underlying markets and spot markets that we would not otherwise have”.
Since the congressional hearing, cryptocurrency enthusiasts have started to point to the idea that regulation is actually a positive thing. While it will create hurdles for some, it will also snuff out fraud and scams. At the same time, the fact that governments are even considering regulating the industry validates cryptocurrency as a valuable asset.
Crypto Isn’t Going Anywhere
While the fear in the beginning of the year was that cryptocurrency would be banned in many regions around the world and that regulation would be a bad thing for the industry, these fears are proving to be unfounded.
At the end of the day, while governments around the world are pushing to regulate the crypto-industry, few will likely chose to ban these assets. Moreover, the idea that governments are interested suggests that we’re only seeing the beginning of the industry.
Although cryptocurrencies and altcoins had a horrible January month across the board, as these monetary tools continue to gain validation around the world, their values are likely to continue upward in what we believe will be one of the strongest years for the crypto-space yet.
Read more at:
https://seekingalpha.com/article/4145444-cryptocurrency-regulation-boosts-markets?page=3
