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On Eve of Crypto Senate Hearing, Regulators Look to Fix the System

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When it comes to the future of cryptocurrency regulation, few events are as consequential as Tuesday’s Senate Banking Committee hearing. On this day, Capitol Hill will be the venue of multiple hearings on cryptocurrencies, focusing on the oversight role of the nation’s  securities regulators.

Securities and Exchange Commission (SEC) and Commodity and Futures Trading Commission (CFTC), the nation’s top securities regulators.

What to Expect

The Senate Banking Committee has invited senior officials from the Securities and Exchange Commission (SEC) and Commodity Futures Trading Commission (CFTC) to speak at the event, which is scheduled to kick off at 10:00 a.m. ET. SEC Chairman Jay Clayton and CFTC counterpart Christopher Giancarlo have each published their prepared remarks , giving market participants full disclosure of the issues they plan to tackle.

SEC

Jay Clayton’s testimony highlights a combination of skepticism and concern over whether cryptocurrencies can be governed using the Commission’s historic approach to currency transactions. He also highlighted the SEC’s enforcement actions concerning initial coin offerings (ICOs), a segment of the market that is coming under more intense scrutiny.

The SEC has expanded its oversight of ICOs significantly over the past year, beginning in July with a landmark ruling that DAO tokens were securities and therefore subject to federal regulations. On Tuesday, Clayton will issue a reminder that merely calling a token a “utility” is insufficient to sidestep federal regulations. Many crowdraises simply aren’t taking that chance and are instead avoiding the U.S. market entirely.

Even with the skepticism, the SEC’s top regulator says he remains committed to exploring whether cryptocurrency exchanges would benefit from federal regulation. According to the prepared remarks:

“[W]e are open to exploring with Congress, as well as with our federal and state colleagues, whether increased federal regulation of cryptocurrency trading platforms is necessary or appropriate. We also are supportive of regulatory and policy efforts to bring clarity and fairness to this space.”

Crypto exchanges fall outside federal regulation, and are instead governed by state licenses. Domestic exchanges must therefore apply with each individual state to access local markets.

CFTC

Christopher Giancarlo argues that cryptocurrencies have presented “novel challenges for regulators,” but that his agency has the power to investigate domestic exchanges that may pose risks to investor safety. According to Bloomberg, the commodities regulator has already subpoenaed two high-profile cryptocurrency companies, possibly over suspicions that they were colluding to boost the value of bitcoin. The companies in question are crypto exchange Bitfinex and Tether, a startup whose tokens provide a convenient substitute for the U.S. dollar.

Giancarlo’s remarks also show that the CFTC is confident it protect traders involved in bitcoin futures and other derivatives products. However, the same guarantees cannot be provided for retail investors.

The outcome of the hearings could have major implications on cryptocurrency regulation, especially if the CFTC is granted a wider mandate to govern cash transactions involving cryptos.  Although this would require a legislative amendment, Giancarlo says such a step would help overcome “shortcomings of the current approach,” namely, “state-by-state money transmitter licensure that leaves gaps in protection for virtual currency traders and investors.”

 

Disclaimer: The author owns bitcoin, Ethereum and other cryptocurrencies. He holds investment positions in the coins, but does not engage in short-term or day-trading.

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Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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4.6 stars on average, based on 648 rated postsSam Bourgi is Chief Editor to Hacked.com, where he leads content development for one of the world's foremost cryptocurrency resources. Over the past eight years Sam has authored more than 10,000 articles and over 40 whitepapers in the fields of labor market economics, emerging technologies, cryptocurrency and traditional finance. Sam's work has been featured in and cited by some of the world's leading newscasts, including Barron's, CBOE and Forbes. Contact: sam@hacked.com Twitter: @hsbourgi




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Market News

U.S. SEC’s Review of Bitcoin ETF Applications Shows Progress

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The U.S. Securities and Exchange Commission (SEC) is asking for more comments surrounding a rule change that would deliver the first bitcoin ETF to the market. The Wall Street watchdog filed several amendments today inviting comments either in support or opposition of several crypto trading products, including the GraniteShares bitcoin futures ETF, which the agency rejected in August to the dismay of the crypto community, particularly since this ETF is for bitcoin futures and not the underlying asset.

On the heels of that rejection and several others, including the regulator’s disapproval of the Winklevoss bitcoin ETF, the SEC decided to “stay” its orders in favor of a “Commission review.” SEC Commissioner Hester Peirce, who supports a bitcoin ETF, previously explained that the SEC Commission would review the “staff orders”, which is the process that is currently unfolding.

If approved, the ETF would trade on the CBOE, which is the exchange that filed the application for the rule change to green-light the bitcoin product. The SEC will accept comments on the GraniteShares Bitcoin ETF, either for or against, through Oct. 26 at which time it’s reportedly expected to make its decision. In addition to the bitcoin futures ETF, the CBOE also wants to list the GraniteShares Short Bitcoin ETF.

Other Bitcoin Products

In addition to the GraniteShares product, the SEC is also reviewing other rule-change applications, including NYSE Arca, which is pursuing a handful of Direxion bitcoin products. One of the SEC amendments was for the ProShares Bitcoin ETF and the ProShares Short Bitcoin ETF also on NYSE Arca.

The regulator has similarly opened the floor to comments either in support or opposition of these products through Oct. 26. As a result, it appears possible that the SEC could make another announcement on that date. The bitcoin price is little changed on the development, up 1.3% to $6,581 on volume of less than $4 billion.

Wall Street Veterans

In recent days, Bitwise Asset Management, which is behind a crypto index fund, tapped Wall Street veteran Ric Edelman as an advisor. Edelman Financial Services oversees $22.3 billion for clients.

“I am convinced that the industry will meet the SEC’s requirements and resolve the SEC’s concerns. When that happens, you’ll see a bitcoin ETF,” Edelman told CNBC, adding that it could be in two months or two years.

Meanwhile, bitcoin bull Michael Novogratz, who runs Galaxy Digital, recently pared back his BTC price prediction for this year to below $9,000 though he expects the bull-run to show up in early 2019.

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Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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4.6 stars on average, based on 69 rated postsGerelyn has been covering ICOs and the cryptocurrency market since mid-2017. She's also reported on fintech more broadly in addition to asset management, having previously specialized in institutional investing. She owns some BTC and ETH.




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Analysis

Litecoin Price Analysis: Big Optimism Boost Following Litecoin Futures Update

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  • The Litecoin (LTC) price is looking to close in the green, after six consecutive sessions of losses.
  • New regulated cryptocurrency exchange, ErisX, may soon launch Litecoin futures and others.

Positive Litecoin Development

TD Ameritrade, a brokerage firm based in the U.S., have launched a new regulated cryptocurrency exchange, ErisX. This will facilitate spot and futures trading opened by Eris Exchange, a Chicago-based derivatives market.

ErisX, will provide traders access to cryptocurrency spot and futures contracts, within a single exchange. According to a spokesperson from the organization, it will allow investors to trade Bitcoin, Ether, Bitcoin Cash and Litecoin, in addition to futures contracts on cryptocurrencies.

Big Infrastructure Improvement In The Crypto Market

Over the past year now, there has been several encouraging developments, assisting in further market legitimization. The improvement of crypto market infrastructure is becoming more prominent. Liquidity of the cryptocurrencies is greatly increasing as well as market acknowledgement in categorizing digital assets as an emerging asset class.

The introduction of Bitcoin futures contracts by the Cboe Futures Exchange, Goldman Sachs planning to open a cryptocurrency trading desk and CFTC respecting that crypto has a future and is here to stay have all added legitimacy to the market. There’s more: a U.S. Federal Court declared digital currencies as commodities, the growing possibility of a Bitcoin ETF, which could seriously propel the market and introductions of regulated crypto custodians allowing more institutional buyers into the market are also a boon for optimism. As such, the likes of hedge and pension funds inclined to participate.

Technical review

The trend for Litecoin of late has been firmly bearish and a stubborn trend. It has nursed losses for six consecutive sessions, dropping as much as 13% over this period. For almost two months, the price has swung between a range of $70 down to a low of $47 territory. It appears to have formed a bottom, within this range. Currently the price is stuck in between two tough respective supply and demand zones.  Should the bulls manage to sustain the gains finally seen, a test over the coming days back towards $65-70 could be on the cards. Near-term resistance is eyed heading into the $60 area. Support can be observed at $55 and then the psychological $50 area.

LTC/USD daily chart

A breach of either zone, could see huge buying or selling pressure, depending on the direction. Given how long the price has been summoned to this mundane range, chunky moves could be seen. Bulls clearing the highlighted supply, have the potential at a very fast run back towards $90. On the other hand, a breach of the highlighted supply area, could see a catastrophic back towards $30.

Disclaimer: The author owns bitcoin, Ethereum and other cryptocurrencies. He holds investment positions in the coins, but does not engage in short-term or day-trading.

Featured image courtesy of Shutterstock.

Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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4.5 stars on average, based on 33 rated postsKen has over 8 years exposure to the financial markets. During a large part of his career, he worked as an analyst, covering a variety of asset classes; forex, fixed income, commodities, equities and cryptocurrencies. Ken has gone on to become a regular contributor across several large news and analysis outlets.




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Altcoins

Crypto Market Development: South Korea’s National Policy Committee Chair Calls For ICO Legalization

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  • A member of South Korea’s governing Democratic party and the chairman of Korea’s National Policy Committee, Min Byung-Doo, is urging to ease the current regulations on Initial Coin Offerings (ICOs).
  • Min Byung-Doo wants to introduce necessary regulatory framework, allowing ICOs in the country.

Allow ICOs In South Korea

The South Korean National Policy Committee Chief, Min Byung-Doo, is calling for a regulatory framework to be explored. This would be to allow for Initial Coin Offerings (ICOs) to take place within the country. He stated that the current prohibiting of ICOs weakens the industry’s competitiveness appeal with foreign markets. Further boldly adding, this would be preventing growth.

In his statement at to lawmakers, Byung-Doo said, “We can see that the flow of investment is clearly changing compared to ICO and angel fundraising. The ICO has raised $1.7 billion for Telegram and $4 billion for Block.One, it is getting bigger and bigger.”

Further in the statement, Min Byung-Doo said, “Let the government, the National Assembly and the blockchain association quickly create a working group to block fraud, speculation, money laundering and develop the block-chain industry,”. However, he acknowledged the government’s reluctance to create the needed framework.

In September 2017, the Financial Services Commission in South Korea announced a ban on ICOs. The law has not yet been enacted.

Crypto Market Reaction

A lack of reaction has been observed for now, despite this determination to help further legitimize the digital currency market in South Korea. Crypto market developments in the country are always watched very carefully. This is given their large crypto market participation. It was reported in December 2017 that South Korea accounted for as much as 17% of all Ethereum trades occurring in cryptocurrency markets.

Market Reactions To South Korean Related News

Ripple (XRP) crashed in January, following CoinMarketCap’s decision to remove XRP price data from Korean exchange desks. This as a result largely brought down the total average.

XRP/USD Coinmarketcap update triggered drop

On 11th January, Korean crypto exchange Coinrail was hacked, and over $40 million in tokens were stolen. Bitcoin initially dropped over 11% on this.

BTC/USD Coinrail hack triggered drop

One final example, UPbit, a South Korean exchange, was investigated by authorities for illicitly moving customer funds to the account of its executives. Bitcoin initially dropped over 7% on the news.

BTC/USD UPbit investigation triggered drop

Given the above mentioned, one should keep an eye on any developments coming out of South Korea, for the foreseeable future.

Disclaimer: The author owns bitcoin, Ethereum and other cryptocurrencies. He holds investment positions in the coins, but does not engage in short-term or day-trading.

Featured image courtesy of Shutterstock.

Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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4.5 stars on average, based on 33 rated postsKen has over 8 years exposure to the financial markets. During a large part of his career, he worked as an analyst, covering a variety of asset classes; forex, fixed income, commodities, equities and cryptocurrencies. Ken has gone on to become a regular contributor across several large news and analysis outlets.




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