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CFTC Commissioner: Regulated cryptocurrency market could attract institutional investors

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CFTC Commissioner: Regulated cryptocurrency market could attract institutional investors
Source: Pixabay

In a recent interview with BlockTV, the commissioner of the Commodities Futures Trading Commission [CFTC], Dan Berkowitz, shed light on a host of different issues that will impact the entry of institutional investors into the cryptocurrency market.

Berkovitz started the conversation by claiming that he is not “anti-crypto or anti-blockchain”. He added that the CFTC has an active enforcement division of around 170 people responsible for catching the “bad guys” in the space, hence prioritizing investor protection.

On the regulation of blockchain technology, he stated that the “emerging” technology was still nascent in its use. The CFTC’s regulations are quite flexible and not “prescriptive”, added the commissioner.

He said:

“We can accommodate new technologies, but, without knowing exactly what technology is and how the blockchain will be used and what the purpose is. We don’t have a definitive set of rules…so it’s an interactive process.”

Berkovitz added that the cryptocurrency and blockchain world may “take some time to develop” as it’s still in an early phase. However, he affirmed that “in the short term there may be uses for cryptocurrencies” and that in the longer term, blockchain would enter the fray.

On the topic of blockchain technology, he stated:

“Something like blockchain, if it realizes its potential, can save a lot of costs. There’s a really reliable, immutable, record of these transactions that we can access and it’s got a great potential to simply a lot of record keeping.”

He added that the CFTC is firmly behind blockchain and cryptocurrencies, but is approaching the situation with caution so that the necessary regulation can be put in place on time.

Speaking on the constant clash between the crypto-industry and the regulatory authorities, Berkovitz stated that there was no “conflict” between the two. Investor confidence and trust are boosted if the industry is under a regulatory “umbrella”, he said. It is pertinent that the right balance between market integrity, investor protection, market innovation, and cost compliance exists. He added,

“We’re finding, recently, that a lot of participants in the market want to be regulated. They don’t the be unregulated and viewed as rogue and somehow outside the system.”

Bakkt and ErisX, two notable cryptocurrency projects that aim to bring publicly traded Bitcoin into the market are awaiting approval from the CFTC for their respective proposals. In light of the same, Berkovitz stated that the CFTC had “several” proposals which were currently under a “review process”. He said,

“We need to ensure that a crypto-product, just like any other product, that gets traded on our market, meets all our standards and we are engaged very actively in that process.”

Bakkt has been pushed from the early part of 2019 to sometime later in the year, as stated by Jeff Sprecher, the CEO of the Intercontinental Exchange in February. Berkovitz, without revealing too much of the approval, stated that the CFTC is working with ICE and that this approval is a ‘priority’ for the agency.

With the influx of institutional investors into the cryptocurrency space, the commissioner stated that regulatory compliance is a must. He added that with the technology pushing into the mainstream and cryptocurrencies slowly becoming an asset class like equities and commodities, institutions will enter and will demand a strong regulatory atmosphere. He added,

“There is a definite market need to have the regulation of markets these institutional investors will invest in.”

He predicted that if a regulated cryptocurrency atmosphere is created, several corporations will venture into virtual currencies and blockchain technology. Berkovitz claimed that there were no significant frauds or market manipulations in the cryptocurrency industry in comparison to any new industry operating an unfamiliar technology.



Contrastingly, the Chairman of the SEC, Jay Clayton, stated last week that the regulatory agency was unsure about approving a publicly-traded Bitcoin product due to the nature of market manipulation and volatility of cryptocurrencies.

He ended his interview by stating that irrespective of a “crypto-winter” or a “crypto-spring”, the CFTC will maintain its long-term perspective on cryptocurrency and blockchain technology and will apply their regulation accordingly.





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Graduate of Finance and Economics, interested in the intersection of the world of decentralized currency and global governance.

Bitcoin

Bitcoin [BTC] surges above $5,500 and breaks major resistance level; collective market rises

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Bitcoin [BTC] surges above $5,500 breaking major resistance level; collective market surges
Source: Pixabay

Bitcoin [BTC] broke out of its sideways trend that saw coins fall after a brilliant start to April. This “break-out” is especially significant since it came days after the coin was trading sluggishly, pulling the market cap below $175 billion.

After breaking the $5,200 level on April 16, the coin held steady, showing no noticeable dips. However, it also began losing the momentum it had gained when it rose by 15 percent on April 2. Many saw the past week as Bitcoin losing steam, opining that a drop to as low as $4,000 would manifest. This pessimism coupled with the delisting dilemma saw the global market decline by 3.31 percent over the past weekend.

Given this backdrop, the present Bitcoin price incline was even more bullish for the collective market. Further, this was not just an effort to shrug off “sideways bears,” but instead, two key levels were broken in order to usher a collective market rise and sustain BTC bullishness.

Source: Trading View

RESISTANCE

The first, as indicated by eToro’s senior market analyst Mati Greenspan, was the resistance level of $5,350. When Bitcoin began to consolidate following the early April high, Greenspan stated that if the BTC price were to punch above the aforementioned level, it “would likely serve as confirmation that we’re pushing higher and will lead to further buying pressure.”

Greenspan stated that the $5,350 level acted as a major support level throughout 2018. Hence, it is incredibly important that Bitcoin surge above it in the next rise to consolidate buying pressure. Another important point to signal the coming of a bullish market was the 200-day moving average which Bitcoin has stayed above since the April 2 rally.

PSYCHOLOGY

The other significant level for the collective market is Bitcoin’s ascendance over $5,500, which it managed courtesy of this rally. Many, including Greenspan, pegged $5,000 as a key psychological level for the coin and hence, the rise above $5,500 less than three weeks after $5,000 was broken will bring back optimism to the BTC market.



Further, as was seen in the April 2 rise, the Bitcoin pump resulted in the king coin increasing its market dominance. At the close of March, Bitcoin was edging closer to losing the majority. However, the rally saw its share increase to 52.4 percent within a day. Following this recent 4.61 percent increase against the US Dollar, the king coin’s dominance increased to 53.2 percent.

Given the elasticity of the collective market to changes in Bitcoin’s price, the market was awash in green as Bitcoin broke the resistance and psychological levels. Amid this bullish charge, some coins stood out for their above-average gains, which included Bitcoin Cash [BCH], Cardano [ADA], EOS [EOS], Litecoin [LTC], and the exchange-ousted Bitcoin SV [BSV].





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