SEC testimony is supportive of cryptocurrency and related technologies

in #cryptocurrency • 8 years ago (edited)

The start of cryptocurrency innovation in America

The US Senate Commitee papers have been released here: Virtual Currencies: The Oversight Role of the U.S. Securities and Exchange Commission and the U.S. Commodity Futures Trading Commission

SEC meeting livestream can be found here.

Some highlights from tomorrow's testimony from Securities and Exchange Commission Chairman:

  1. "These warnings are not an effort to undermine the fostering of innovation through our capital markets – America was built on the ingenuity, vision and spirit of entrepreneurs who tackled old and new problems in new, innovative ways. Rather, they are meant to educate Main Street investors that many promoters of ICOs and cryptocurrencies are not complying with our securities laws and, as a result, the risks are significant."
  2. "Through the years, technological innovations have improved our markets, including through increased competition, lower barriers to entry and decreased costs for market participants. Distributed ledger and other emerging technologies have the potential to further influence and improve the capital markets and the financial services industry. Businesses, especially smaller businesses without efficient access to traditional capital markets, can be aided by financial technology in raising capital to establish and finance their operations, thereby allowing them to be more competitive both domestically and globally. And these technological innovations can provide investors with new opportunities to offer support and capital to novel concepts and ideas."
  3. "Said simply, we should embrace the pursuit of technological advancement, as well as new and innovative techniques for capital raising, but not at the expense of the principles undermining our well-founded and proven approach to protecting investors and markets."

Highlights from Commodity Futures Trading Commission Chairman

  1. "Traditionally, there has been a need for a trusted intermediary – for example a bank or other financial institution – to serve as a gatekeeper for transactions and many economic activities. Virtual currencies seek to replace the need for a central authority or intermediary with a decentralized, rules-based and open consensus mechanism. An array of thoughtful business, technology, academic, and policy leaders have extrapolated some of the possible impacts that derive from such an innovation, including how market participants conduct transactions, transfer ownership, and power peer-to-peer applications and economic systems."
  2. "...In fact, virtual currencies may be all things to all people: for some, potential riches, the next big thing, a technological revolution, and an exorable value proposition; for others, a fraud, a new form of temptation and allure, and a way to separate the unsuspecting from their money."
  3. "The CFTC and SEC, along with other federal and state regulators and criminal authorities, will continue to work together to bring transparency and integrity to these markets and, importantly, to deter and prosecute fraud and abuse. These markets are new, evolving and international. As such they require us to be nimble and forward-looking; coordinated with our state, federal and international colleagues; and engaged with important stakeholders, including Congress."
  4. "We are entering a new digital era in world financial markets. As we saw with the development of the Internet, we cannot put the technology genie back in the bottle. 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. The evolution of these assets, their volatility, and the interest they attract from a rising global millennial population demand serious examination."
    5."With the proper balance of sound policy, regulatory oversight and private sector innovation, new technologies will allow American markets to evolve in responsible ways and continue to grow our economy and increase prosperity. This hearing is an important part of finding that balance."

Credits to yudhidel

TLDR: SEC is supportive of cryptocurrency technology and investors but wants to regulate illegal activity

First witness: The SEC will continue investing ICOs issuing security-like tokens. They will also continue to monitor fraud and KYC/AML measures across the ICOs that are running. Overall, the SEC is supportive of the technology and want to support cryptocurrency investors in the USA.

Second witness: We are taking the self-ceritification model from derivatives and future markets which have worked well. The SEC is looking to introduce legislation to amend the authority to regulate retail investors to invest into ICOs. They are not looking to overgulate this sector and want to take a 'do not harm' approach like the Republican Congress took with respect to regulating the internet in the dot com boom.

How the US stock market correction has affected the cryptocurrency markets

Over the past few days, and particularly over the past 24 hours news on Wall Street has gone from hyper-optimistic to downright depressing.

Watching this play out has caused two questions to arise:

  1. How strong is the correlation between traditional financial markets and the cryptocurrency markets?
  2. If the correlation exists what the implications of today could be for cryptocurrencies?

A resource that we have used is Sifr Data, a free cryptocurrency analytics, simulation, data and visualisation tool.

The numbers in this first chart are called z-scores which represent the strength of a relationship between two sets of data.

The S&P 500, because of it’s z-score, has a “weak positive relationship” to Bitcoin. Today, the Dow Jones dropped over 1,200 points constituting the single largest point drop in the measures 130+ year history, reversing all gains it has made in 2018. With this market trend in mind, the cryptocurrency market cap has dropped below $300bn with Bitcoin breaching the $7000 mark. Although the correlation is not statistically significant, it is interesting to see the relationship between the downturn of the stock and cryptocurrency markets.

What's causing all of this?

There are two main theories as to why the US stock market is correcting itself today.

Firstly, the Federal Reserve’s 10-year yield rate, which determines the interest rates the US government and Americans pay on their debt has increased recently. Higher interest rates can lead to decreased consumer spending and can increase inflation, both rather bearish signals.

Secondly, some prominent economists/former Fed Chairman declared that we’re entering a “massive multiyear bear market”, driving fear through the roof in the markets.

In the world of crypto, this FUD is combined with the recent price fall, crypto’s notoriously panicky retail investors, and general uncertainty to end up with potentially a long-term bear market. Market sentiment, more than anything else, drives the price of cryptocurrencies and is a worrying sign for the short-term markets.

Cryptovate Investments sees this as a healthy correction of the market that was overdue for the stock markets. In regards to the cryptocurrency world, BTC dominance remains at a low 36% and more exchanges are introducing ETH pairings to help reduce the correlation between altcoin prices and BTC. There will be a few interesting weeks ahead of us in the market.

We will leave you with this to consider about the state of the crypto/stock markets:

Follow our Steemit blog for more news coverage and cryptocurrency insights.

Disclaimer: Research publications are furnished by independent authors on the Cryptovate team. You are not obtaining any advice from Cryptovate Investments. You should always consult with your advisers before making any investment decisions and should you have any questions as to the laws that govern our cryptocurrency research, you should consult with your legal or investment advisers.

#ico #altcoin #bitcoin #usa
8 years ago in #cryptocurrency by
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