- New Wall Street Sheriff Gary Gensler Targets Digital Tokens, But Bitcoin Price Has Stable After Regulatory Threats.
True believers in the transformative power of cryptocurrencies, and in their ability to usurp the existing financial system and crypto trading signals, have long held onto the conviction that Gary Gensler, chairman of the Securities and Exchange Commission (SEC, for short), I would come to their aid and bless their mission in some way.
And it is that, in addition to his previous functions in the field of politics and banking, Gensler taught since 2018 a course at the Massachusetts Institute of Technology on “Blockchain and money.” Lectures from the smiling Professor Gensler are still available online – say the analyst of SafeTrading.
But teaching a course on something and adopting it as a world view are two different things.
- “Right now, we don’t have enough protection for investors in the cryptocurrency sector. Frankly, right now, it’s more like the Wild West,” he said in a speech on Aug. 3.
- “This asset class is plagued by fraud, scams and abuse … In many cases, investors are unable to obtain accurate, balanced and complete information. If we do not address these issues, I am concerned that many people will lose out.”
Among the concerns are tokens that function largely like securities, but without proper documentation, approval, or disclosure. In his lectures, Gensler referred to the “duck test.”
- “Basically, if it squawks like a duck and walks like a duck, it’s a duck,” he said then. Similarly, many tokens and related products are essentially securities.
Other concerns centered on circumventing bans on reaching American consumers, “dodging” taxes and penalties, and even national security.
To be fair, it’s hard to single out the crypto industry as the Wild West when the heavily regulated American stock market crypto trading signals have their moments, too. One only has to see the rise of more than 80% of the shares of Robinhood, which has just gone public. If all goes well then goldenslot!
However, the most pressing threat to the cryptocurrency sector is considered to be increased regulation. So why has the price of cryptocurrencies been stable around $ 37,000 compared to Gensler’s statements? Changpeng “CZ” Zhao, CEO of Binance, might reply that “1 bitcoin = 1 bitcoin”, a gnomic point he made this week. “It’s everything else that’s volatile,” he tweeted.
Why can it be true?
He’s not necessarily wrong, in the sense that bitcoin has lost close to 50% of its value since the peak this year, while Robinhood’s stock gained 80% in its first hour of trading on Wednesday. But in addition, Robinhood does not have the ambition to turn its shares into a global trading unit.
In a document published last month (Which was seen by the SafeTrading team), the Bank for International Settlements (BIS) shed an interesting light on the motives that drive cryptocurrency buyers, explaining to some extent its resistance in the face of what appear to be existential threats to its project.
- The BIS states that, contrary to popular assumption, cryptocurrencies are not being sought as “an alternative to fiat currencies or regulated finance in the United States.” Buyers are not particularly concerned about security and anonymity, supposed advantages of a blockchain-based currency and divorced from governments or central banks. In general, they do not “distrust” the existing financial system.
- On the contrary, “the majority of investors in cryptocurrencies are aware of the inherent risks” and tend to be more educated than the average of the population. In other words, these guys (and they are typically men – less than 1% of the female population owned crypto in 2019, compared to around 3% of men), they know what they are doing.
Despite the wild utopian vision advocated by some of the noisy cryptocurrency followers, most buyers are not trying to change the world. They are only looking for a way to earn money, usually in the long term. “A clearer regulatory and supervisory framework for cryptocurrency markets can be beneficial to the sector,” the BIS document states.
Also, buyers are loyal. The BIS notes that the practice of holding onto cryptocurrencies, even when the price falls, is “ubiquitous.”
Gensler noted that the class of crypto assets is reportedly valued at about $ 1.6 trillion. Despite his hardening of tone, nothing he has said has been enough to convince holders to part with their money and return it to the established financial system. For them, the “regulate, don’t erase” stance of the US authorities is so far a validation.
Future trends in digital payments
It has been a while since we have stopped using paper money or fiat money in all our payments. Credit and debit cards, as well as online purchases, eliminated the need to carry cash in your wallet, and the concern about change, quantity, and counterfeiting of coins and checks.
As this has become part of our daily routine, new solutions have emerged to make our lives even easier, giving us more freedom and practicality. Various fintechs and startups, for example, have been launching quick payment applications that are very similar to social networks. In this way, the payment process is more agile and fluid – say the analyst of SafeTrading.
In 2020, the Central Bank of Brazil launched Pix, a fast payment system, 24 hours a day, 7 days a week, which works through easy-to-remember passwords. Thus, other well-known companies are finding ways to bring the world of cryptocurrencies into people’s daily lives, partnering with brands and credit card applications, to spend cryptocurrencies to buy common things, such as in supermarkets and bakeries.
-In Collaboration with Cryptofii