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The US Congress played host to several cryptocurrency related hearings this week, with both the Agriculture Committee and the Monetary Policy and Trade Subcommittee hearing testimony from experts. While the Agriculture Committee heard about the difficulties in regulating certain tokens, especially those which start out as securities since they are offered before they morph into functional utility tokens, and become commodities instead, it was the Monetary Policy Subcommittee which heard the more inflammatory testimony. This hearing, with a much broader remit, was called ‘The Future of Money: Digital Currency’. One expert described bitcoin as scrip, while also arguing that the idea of a digital currency issued by a central bank was ‘one of the worst financial ideas of recent times’. However, the fact that on the same day there were two hearings about cryptocurrencies shows that there is genuine interest in the technology. It is becoming clear that it is only a matter of time, a when rather than an if question, before cryptos begin to truly make their mark. This was highlighted by one question which asked what could the US Congress do to overcome the main impediments to the widespread adoption of blockchain and cryptos.
One of those impediments was the lack of regulation. It looked like Coinbase had overcome part of that when they issued a statement that they had received the go-ahead from the Securities and Exchange Commission to list tokens which are considered to be securities on their exchange. It was the culmination of a plan which began with the acquisition of several securities exchanges, Keystone Capital and Venovate Marketplace, earlier this year. However, that report was retracted shortly after, when Rachel Horowitz, the spokesperson for Coinbase, emailed Bloomberg refuting the earlier report. The confusion seems to have come about over what permissions Coinbase needed to acquire those companies, who already had licenses to trade securities. While Coinbase employees discussed the deal informally with members of the SEC, they did have to get permission from another organisation, the Financial Industry Regulatory Authority (FINRA). The cryptocurrency exchange did receive the necessary permission from FINRA to go ahead with their purchase. SEC approval to begin trading crypto securities would be a big deal, it could spark the next big boom in the space. Many investors are eagerly awaiting the go-ahead, and Coinbase looks to be the company closest to receiving the right permissions.
The overall sentiment that big financial institutions have about cryptocurrencies does seem to be changing. The Financial Stability Board (FSB), set up in the aftermath of the 2008 Financial Crisis and which monitors and issues advice about the global financial system, has said that cryptos do not pose a risk to the system. Furthermore, the Board, headed up by crypto-sceptic Mark Carney, is prepared to ‘help to identify and mitigate risks to consumer and investor protection, market integrity, and potentially to financial stability’, indicating that it will be involved in creating an international framework for regulating digital currencies. The announcement sparked a furious surge in the price of bitcoin, boosting it past the $7,000 mark for the first time in a month. Adding to this positive sentiment was news coming from BlackRock, the largest asset management firm in the world, was ‘excited about blockchain technology’, and are looking into investing in the tech. On top of this, Peter Theil, founder of PayPal and an investor who prides himself on being somewhat of a contrarian, has backed Block.one. The EOS developer is looking for new investments and is holding a funding round. While the exact amount of money put into the company has not yet been released, several notable investors are rumoured to have joined Thiel in backing the company. These include Jihan Wu, of Bitmain fame, as well a couple of hedge fund billionaires, Alan Howard and Louis Bacon.
On the back of the FSB report bitcoin (BTC) experienced its best week for a while. It started out at $6,388 and fell off to $6,145. The price went up at the beginning of the week, but really skyrocketed on Tuesday, once the FSB had released its findings. It shot up to a high of $7,528, and finished off at $7,366.
Ethereum (ETH) started out at $442, and while it did not get nearly as big a boost from the FSB as bitcoin did, the price did rise on the news. It broke the $500 mark, topping out at $511, before it fell back down to end the week at $481.
XRP was trading at $0.45 seven days ago. Like the two bigger coins it improved its position greatly during trading this week. It got up to $0.52, but couldn’t hold that position for long, and ended up at $0.48
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