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Cryptocurrency Act 0f 2020 To Bring Regulatory Clarity In The United States

  • Cryptocurrency act of 2020 to clarify the power of each government agency to regulate the crypto space

The Cryptocurrency Act of 2020 has been introduced into the House of Representatives, and seeks to clarify the power of each government agency to regulate the crypto space.

Up to now multiple government agencies have been competing to regulate the crypto space, leading to a confusing mixture of laws. This is suppressing the crypto space, since crypto companies can be attacked by multiple federal agencies. For example, the Securities and Exchange Commission (SEC), the Commodities Futures Trading Commission (CFTC), the Internal Revenue Service (IRS), the Financial Crimes Enforcement Network (FinCEN), and the Department of the Treasury have been issuing laws with overlapping jurisdiction, and these laws often do not agree with each other.

The bill proposes that the CFTC regulate crypto-commodities, the SEC regulate crypto-securities, and that FinCEN regulates crypto-currencies. The bill defines crypto-commodities as economic goods or services, crypto-currencies as digital representations of fiat like stable coins, and crypto-securities as debt, equity, and derivatives instruments on the blockchain.

It remains to be seen if this law will pass, but if it does it may give the crypto space in the United States a better chance to thrive.

 

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CFTC Chairman Says Ethereum Futures Expected in 6-12 Months

Commodity Futures Trading Commission (CFTC) Chairman Heath Tarbert recently declared that Ethereum is a commodity, and is now saying that he expects officially regulated Ethereum futures to launch in the United States within the next 6-12 months.

The reason that the CFTC considers Ethereum a commodity is that it is sufficiently decentralized, and there is no longer a centralized company in charge of Ethereum who is selling coins to investors who expect profit. This puts Ethereum under CFTC jurisdiction and therefore eligible for having a futures market in the United States, unlike many other cryptocurrencies that are considered securities and fall under Securities and Exchange Commission (SEC) jurisdiction.

In general, the CFTC seems to be more willing to working with the crypto space than the SEC, as shown by the CFTC approving two different Bitcoin futures exchanges, while the SEC has not allowed any crypto exchange-traded funds (ETFs) nor any officially approved initial coin offerings (ICOs).

That being said, Tarbert says the CFTC is investigating whether Ethereum’s planned transition to Proof of Stake (PoS) will impact its classification as a commodity. In general, Tarbert believes that PoS is more decentralized than Proof of Work (PoW). However, the details about Ethereum’s transition to PoS are not finalized yet, and the transition may not happen for months, so the CFTC cannot make a decision yet.

 

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Ex-CFTC Chair: Trump Admin Coordinated to Pop 2017 Bitcoin Bubble

Former Commodity Futures Trading Commission (CFTC) Chairman Christopher Giancarclo says that the Trump administration coordinated to pop the Bitcoin bubble of late 2017.

They did this by introducing Bitcoin futures on the Chicago Mercantile Exchange (CME). Specifically, Giancarlo says:

“One of the untold stories of the past few years is that the CFTC, the Treasury, the SEC and the [National Economic Council] director at the time, Gary Cohn, believed that the launch of bitcoin futures would have the impact of popping the bitcoin bubble. And it worked.”

The theory was that institutional money would tame the rapidly rising price of Bitcoin on the spot markets, as Giancarlo says: “We believed that, should bitcoin futures go forward, it would allow institutional money to bring discipline to the value of the cash market. And that’s exactly what happened.”

Indeed, the Bitcoin bubble of 2017 peaked at USD 20,000 a day before the launch of Bitcoin futures on CME, after which point the price of Bitcoin began to crash, precipitating the bear market of 2018.

Apparently this decision was driven by the events of the 2008 Great Recession, when a massive economic bubble collapsed and caused widespread loss. Regulators believed that it was safer to pop the Bitcoin bubble than to let it inflate to its maximum size, since then when it pops the losses would be less. Of course, cryptocurrency users, traders, and investors who collectively lost hundreds of billions of USD when the 2017 Bitcoin bubble popped probably disagree with this ideology, since perhaps the bear market would have not been as severe if CME Bitcoin futures were never introduced.

 

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Bitcoin.com Applies for CFTC-Regulated Futures Exchange

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Bitcoin.com is trying to get Bitcoin Cash listed on an officially regulated futures exchange in the United States. The asset in question is currently the #4 cryptocurrency on CoinMarketCap with a market cap of $5.3 billion, although this is far smaller than Bitcoin’s market cap of $185.5 billion.

The fork of Bitcoin has been struggling to get recognition ever since splitting off but despite spending a lot of money on marketing and even an exchange, the altcoin has been languishing in the rankings. As David Shin, the head of Bitcoin.com’s exchange unit, says:

“Within a year I want to make that the second- or third-largest market cap. To get from No. 4 to No. 3 or No. 2, we have to see more volume”.

The lack of volume suggests a lack of interest, and Shin claims to be already in talks with the Commodities Futures Trading Commission (CFTC), which is in charge of futures markets in the United States. Also, Shin wishes to speak to the Chicago Mercantile Exchange (CME), which hosts the biggest Bitcoin futures exchange in the United States.

It is easier said than done to list a cryptocurrency on a United States futures exchange, however. The CFTC has rejected many proposals for Bitcoin and other cryptocurrency futures markets, and at this time there are only a couple of Bitcoin futures markets in the United States, which are on CME and Bakkt. Additionally, even if successful, the process of getting a new futures market approved by the CFTC can take many months or sometimes well over a year as was the case with Bakkt.

 

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Bitcoin Gives in to Selling Pressure

Bitcoin Gives in to Selling Pressure

Bitcoin could not withstand the selling pressure after losing its grip on USD 10,000 yet again during Europe trading time yesterday when the cryptocurrency slid down from its daily high of USD 10,259 to remain under 5-digit figures all the way until Eastern Coast in the US opened to trade.

Even then, the recovery failed to last four hours. After making the arduous climb to USD 10,129, price suddenly took a plunge to USD 9,660 at around 10:30 pm UTC and now trades around that same price as Shanghai approaches afternoon (CoinDesk).

Altcoins are now back at where they were before last week’s recovery, and the bearish bias looks to be confirmed if Bitcoin cannot reclaim lost territory within the next 24 hours.

$BTC looks to be creating lower-highs and lower-lows on the daily chart

Marked are the open and support areas based on the weekly chart with previous support possibly flipping to resistance

If confirmed, watching the next weekly support at $8975 as a potential target pic.twitter.com/yG2WO2yrzX

— Josh Rager 📈 (@Josh_Rager) July 23, 2019

Josh Rager, crypto analyst, is one of those who has now turned to go with the current, with previous support levels likely to turn into resistance. The lower highs that have been managed, coupled with lower lows, leads Rager to believe that we may have to dig in and prepare for a USD 8,975 valuation should bears continue to have their way.

With the headlines in the news still equal in terms of positive and negative coverage this week, Bitcoin’s dominance as pointed out yesterday, continues to be the constant winner, and advocates will be pleased to see how sentiment finds good support in fundamentals like that.

One potentially important piece of news that could affect sentiment this week is that of Bakkt, the platform for Bitcoin futures that was predicted to be the catalyst for institutional investment in Bitcoin. After over a year of intense hype leading up to its original launch at the end of 2018, Bakkt eventually ran into operational hurdles and has been delaying its launch over and over again.

Its latest announcement yesterday seemed to be more of the same news as in the past few announcements, in so many words explaining that they were not ready to formally launch the platform. Whether this delay is to do with technical aspects as seems to be from the wording of their blog posts is a matter of some speculation online, with some believing that it is actually their regulatory compliance that is holding the launch back.

Today kicks off user acceptance testing @ICE_Markets for the Bakkt Bitcoin Daily & Monthly Futures contracts

Testing is proceeding as planned with participants from around the world

— Bakkt (@Bakkt) July 22, 2019

As per the info from the platform, they are now accepting people to test their daily and monthly futures, with international users invited to apply to become the first testers. The timing was deliberate, since 22 July 2019 is only two days after the 50th anniversary of Apollo 11. Once fully in play, Bakkt’s futures will be listed and traded at ICE Futures US and cleared at ICE Clear US.

Derived from the word “backed”, Bakkt’s major difference from previous iterations of Bitcoin futures is that its offerings will be the first one backed by actual Bitcoin, rather than cash settled like the offerings by other platforms. Some crypto commentators believe that it is this need to buy or sell actual Bitcoin to settle futures contracts that will really drive trading volumes for Bitcoin, as well as fuel an increasing demand for it, eventually driving prices upwards for the long term. The US Commodity Futures Trading Commission (CFTC) Commissioner Christopher Giancarlo himself believed that fintech’s sheer pace of progress had been the major cause for the regulators to stall their approvals for such instruments like Bakkt.

Many continue to believe that Bakkt is still significant and will have a major role to play in determining long-term trends for the crypto market. Fundstrat Global Advisors managing director Sam Doctor is confident that Bakkt will be ready in its full form by September. He says that institutional money is still very much in the wings, just waiting to pounce:

“There appears to be a critical mass of adopters ready to come on board on Day 1 of the Bakkt launch, with the sales team gaining traction among brokers, market makers, prop trading desks and liquidity providers.”

$BTC 1W CME Futures. Recap of unfilled gaps: ($11,730.00, $8,440.00, and $7,180.00) also note EMA 26 has crossed over EMA 55 as a potential bullish sign for the mid term. Short term let’s see which gaps get filled first. #Bitcoin #Crypto pic.twitter.com/Dixbv3T2xH

— Bart Simpson (@CryptoBartSimps) July 22, 2019

Whatever the developments with Bakkt, the more immediate concern now for Bitcoin holders is how speculators will react, particularly because CME futures contracts which are about to expire has an existing gap around USD 8,500.

Some believe that this is now the rational level for Bitcoin to arrive at before it identifies a new support level. Optimists aren’t too worried, though. As this one trader puts it:

we had the cme futures bear.
soon we will have the bakkt bear.

— Diary of a REKT man (@diaryrektman) July 23, 2019

And so, if we are now in the throes of the CME bear, as we seem to be every end of month, we should be prepared for a Bakkt bear. Judging from the past attempts at price breakdown, though, USD 8,500 levels will be seen by many as a rare, if not last, opportunity to make serious entry points.

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Bitcoin Fights Off Selling Pressure to Climb Above $7,800

Bitcoin Fights Off Selling Pressure to Climb Above ,800

After yesterday’s failure to keep up a push towards an important resistance level at USD 8,000, Bitcoin bulls fought off intense selling pressure to move a few steps ahead from support levels at USD 7,600 to end today in Asian markets at a respectable USD 7,820 (CoinDesk, 6:30am UTC).

The 2% gains over the last 24 hours concealed a fightback from a USD 7,478 low to a USD 7,973 high that happened almost as soon as Japan took over from North American markets, proving once more than the bulls were playing in Asia.

This improvement came on the back of late revelations yesterday from the US Commodity and Futures Trading Commission (US CFTC) that institutional investors had gone all-in on long Bitcoin futures as of 14 May 2019. It was, for many, a huge sign of confidence from Wall Street money that Bitcoin’s outlook for the long term had not looked any less bullish in the past week.

Most analyses in the past 24 hours on social media agrees: that the long term trend is still positive.

The momentum for #bitcoin looks to be slowly tapering off on the daily chart.
All momentum indicators are pointing down but the trend is still to the upside. The next price target for $BTC is $8,000 then $8,600; support: $7670. pic.twitter.com/uPmcECdz8k

— PriceAnalyses.com (@price_analyses) May 24, 2019

Startup founder Erik Voorhees also Tweeted, referencing a Tweet eight years ago in 2011, when a man urged people to invest their life savings into Bitcoin at the then-peak of USD 31. Price later declined to below 10% of the peak to USD 2. Voorhees reminded that we could be in the same phase right now.

This guy looks like genius now, but this tweet was almost exactly the 2011 peak of $31. Price declined for a year down to $2 and stayed there for months. Bitcoin was “dead.” Even those who acted on this tweet would’ve sold soon thereafter, bitter and angry. Hodl is a discipline. https://t.co/EZrhLWl1Ae

— Erik Voorhees (@ErikVoorhees) May 24, 2019

 

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CFTC Commissioner Says Sheer Pace of Fintech Has Stalled Bakkt Type Approvals

CFTC Commissioner Says Sheer Pace of Fintech Has Stalled Bakkt Type Approvals

CFTC Commissioner Christopher Giancarlo believes that the current period of innovation makes it challenging to approve proposals like Bakkt.

The U.S. Commodity Futures Trading Commission (CFTC) is an independent agency of the US government created in 1974, that regulates futures and options markets.

Bakkt had promised prospective clients it would request permission from the CFTC to provide the first Bitcoin futures that would be physically deliverable daily, as well as storing clients Bitcoin in a physical warehouse on their behalf. The CFTC suggested that Bakkt registers as a trust company to circumnavigate stalling compliancy issues.

With the news that the Intercontinental Exchange (ICE), the owners of the New York Stock Exchange, is now attempting to facilitate the launch of its delayed Bakkt platform by obtaining a New York cryptocurrency license, the complications that new crypto projects face are a sign of the times according to Giancarlo, who clarified the difficulties:

“The first is that we live in a period of exponential technological change. That is, the sheer speed of innovation has increased exponentially, both in terms of production of new models and products and their subsequent public adoption.”

Giancarlo makes it clear that the pace of change within the industry means that regulators simply can’t catch up with new innovations without what he calls “heightened technological literacy across leaders in business and government.”

However, he points out that cryptocurrency innovation could have saved the 2008 global financial crisis, commenting, “Today I want to take stock of the current state of blockchain technology and renew a focus on how it can impact – and improve – our markets,” adding:

“But imagine what a difference it would have made a decade ago on the eve of the financial crisis if regulators had access to the real-time trading ledgers of large Wall Street banks, rather than trying to assemble piecemeal data to recreate complex, individual trading portfolios.”

 

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Bakkt Gets Creative with NY Crypto License

Bakkt Gets Creative with NY Crypto License

The Intercontinental Exchange (ICE), owner of the New York Stock Exchange, is attempting to facilitate the launch of its delayed Bakkt platform by obtaining a New York cryptocurrency license to seemingly bring about a more favorable outcome, according to Bloomberg’s report.

The much-lauded physically delivered Bitcoin futures platform – Bakkt – which is expected to further the adoption of Bitcoin to both institutions and retail investors, has been delayed for five months, with currently no date set for launch, as CEO Kelly Loeffler hinted:

“While we’re not yet able to provide a launch date, we’re making solid progress in bringing the first physical delivery price discovery contracts for Bitcoin to the .S, where price formation will occur in federally regulated, transparent markets.”

The delay has been for the most part due to custody concerns from the Commodity Futures Trading Commission (CFTC) which considered the custody infrastructure currently in place to be inadequate. Moreover, the regulator’s rules require clearinghouses to deposit customer funds at a bank or trust company – none of which Bakkt is, according to the report. Although, the CFTC had earlier suggested Bakkt register as a trust company to circumnavigate the concern.

CFTC had granted Chicago Mercantile Exchange Inc (CME) and the Chicago Board Options Exchange (CBOE) self-certification based on the fact that they settled their futures contract in cash, unlike in the case of Bakkt where settlements will be in Bitcoin, which raised the initial concerns of custody given the nature of asset theft in the cryptocurrency industry. Moreover, the regulator alongside CME and CBOE agreed to significant enhancements to protect customers.

ICE hopes a New York crypto license will influence the regulator’s decision positively, given that the license grants the Bakkt platform permission from New York’s Department of Financial Services to hold tokens.

In the background, the Bakkt project continues to develop as it grows its workforce as well as acquire asset relevant to its development.

 

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Bakkt Delayed Over Bitcoin Custody Concerns

Highly-anticipated cryptocurrency platform Bakkt has run into trouble with the US Commodity Futures Trading Commission (CFTC) over its custody plans for clients’ Bitcoin.

Bakkt promised prospective clients it would request from the CFTC permission to provide the first Bitcoin futures that would be physically deliverable daily, as well as storing clients Bitcoin in a physical warehouse on their behalf.

However, according to sources familiar with the matter, the CFTC has said that Baakt’s custody protocol would need to take further steps in protecting the cryptocurrency in order to be compliant the commission’s rules. It said they would ”require disclosures of the venture’s business plan and a public comment period, which would have further delayed approval.”

The CFTC has suggested Bakkt register as a trust company to circumnavigate these issues, although it was claimed this could be a time-consuming process and the firm wishes to minimize any further delays. Initially scheduled for a November 2019 launch, several issues with the CFTF have pushed the debut back.

A spokesperson for Bakkt told the Wall Street Journal: ”We are working through the regulatory review process and are looking forward to updating the market soon.”

 

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Ethereum Futures Contract: Net Sentiment Appears Positive

Ethereum Futures Contract: Net Sentiment Appears Positive

The United States Commodity Futures Trading Commission (CFTC) is currently reviewing entries from its Request for Input on Crypto-Asset Mechanics and Markets initiative set up last year aimed at collecting information about Ethereum and the resulting impact of a futures contract based on the digital asset.

After reviewing 43 entries, of which 29 of them seem to provide credible insights into the subject matter, an overall assessment may be that of positive sentiment towards an Ethereum-based futures contract. Of the entries, industry experts such as members from the Ethereum Foundation, Coinbase, Consensys, Circle, Craig Wright, ErisX, among others had provided their opinions about the stance of Ethereum in comparison to Bitcoin – which already has an approved futures contract running.

Highlights from the entries included describing the nature of Ethereum as being essentially a smart contract decentralized application (Dapp) creator first, before being considered a store of value or as a medium of exchange.

The Ethereum Foundation clarified that the intrinsic designs of the Ethereum network are “not financial in nature but simply use the blockchain as a source of high-assurance computation and data storage”.

Circle emphasized on Ethereum’s medium of exchange value: “As with Bitcoin, Ether can be used to pay for transactions and can be used for payments. Unlike bitcoin, tokens on the Ethereum network can be generated using smart contracts and can be used in smart contracts and transfers.”

Another comparison described Bitcoin as simply a store of value and medium of exchange, while with the nature of Ethereum’s versatility, the risks scale alongside, as the Futures Industry Association (FIA) opined: “With the Ethereum Network’s architecture, risk management is potentially more complicated than for Bitcoin by orders of magnitude…”

On the other hand, when the regulator asked about the impact of an approved futures contract on the asset itself, ErisX offered its opinion, suggesting that it would have a more positive impact on the growth and maturation of the market. It believes a futures contract will provide “the potential for greater liquidity, more effective price discovery, and more efficient risk transference”.

Although other players in the industry may have had slightly more critical views about the Ethereum network, the compromise did come at a shared view from larger players on more regulatory oversight on the industry.

The first obstacle to a second official cryptocurrency futures contract in the United States may have been scaled when the Securities and Exchange Commission (SEC) said Ethereum won’t be regulated as security. The second important milestone is an approval from the CFTC, which was initiated when the regulator asked for public opinions about the Ethereum network. CBOE plans to launch an Ethereum futures contract currently awaits the regulator’s approval.

Bitcoin futures contract were launched by Chicago Mercantile Exchange (CME) and Chicago Board Options Exchange (CBOE) in late 2017, which had a compelling effect on the crypto market, taking it to new all-time highs at the time. One major sentiment in the market is that more derivative contracts would have a similar effect on the market. As such, an approved Ethereum futures contract in the US may bode well for the Ethereum support community since the asset’s market value has depreciated by as much as 94.2% at some point; and currently, its price has dropped 89.6% since it’s last all-time high.

Although cryptocurrency exchange BitMEX currently offers an Ethereum futures contract quoted in Bitcoin and has been receiving positive patronage in recent times, still, the market could be set up for an explosive uptrend should the CFTC grant its approval to the CBOE exchange.

 

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