Jay Clayton, the Chairman of Securities and Exchange Commission [SEC], spoke about the reason behind why Bitcoin is not classified as a security, in an interview with CNBC. He also spoke about the much-awaited Bitcoin ETF and the pre-requisites for its approval.
Clayton started by speaking about the areas wherein the investors are being taken advantage of and the markets the SEC finds a need to act on. According to the Chairman, one of the areas is the Initial Coin Offering [IOC]’s market. The ICOs have been the key focus of the regulators since the beginning of the year with several being cracked down such as EtherDelta, and Paragon Inc.
He also spoke about whether ICOs are definitely a security and about the exemptions. The Chairman began by saying that the technology behind cryptocurrencies, i.e., the distributed ledger technology has an “incredible promise” and that it can drive efficiencies in not just the financial markets but also various other markets.
Clayton further stated that the area in the financial markets wherein the distributed technology is prominent is the cryptocurrency market. He went on to say:
“These are replacements for sovereign currencies, replace the dollar, the yen, the euro with Bitcoin. That type of currency is not a security. Let me turn to what’s a security. A token, a digital asset, where I give you my money and you go off and make a venture, […] and in return […] you say […] I’m going to give you a return or you can get a return in the secondary market by selling your token to somebody.”
He further spoke about the Bitcoin ETF, which has been so far rejected by the commission for various reasons including market manipulation. Clayton stated that the Division of Investment Management has been “very clear” with the cryptocurrency space regarding the pre-requisites for the approval of an asset class product. He added that one of those pre-requisites is the pricing that investors can rely on and asset verification. Clayton went on to say:
“those hurdles are the hurdles that we think the main street investor expects if they’re going to invest in a product. I understand that there’s a great deal of discussion about these crypto assets. But again, we’re not gonna, we’re not gonna relax our wounds based on the level of discussion, we need to know that the pricing”
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Bitcoin will likely be valued at $100,000 with a market cap of over $2 trillion before the end of 2021
The entire cryptocurrency market seems to be on the brighter side of the market since the beginning of the year. A majority of the coins have recorded significant recoveries from their 2018 slump, a period during which most coins lost over 90 percent of their value, when compared to their all-time highs. Among all the coins in the market, Bitcoin [BTC] aka the digital gold, was noted to be making a massive comeback as the coin breached the $11,000 mark after nearly 15 months. The coin however, soon retracted to settle below the $11,000 level.
According to CoinMarketCap, at press time, Bitcoin was trading at $10,887.27 with a market cap of $93.549 billion. The coin recorded a 24-hour trading volume of $20.757 billion for the past 24 hours and saw a massive rise of over 17 percent over the past seven days.
Anthony Pompliano, Co-founder of Morgan Creek Digital Assets, predicted that the largest digital currency could rise to reach $100,000, before the end of 2021. Pomp added that he was around 70-75 percent confident in this prediction. He stated,
“As I have previously said, making predictions is difficult […] Part of my process as a professional money manager is forming a thesis (price target), identifying a timeline (date), and establishing a confidence level. And then constantly re-evaluating those three aspects of my thought process as I receive new information.”
Pomp however, listed six pointers that have to be understood beforehand. First, this prediction is not an investment advice, and people should do their own research before investing in the digital currency. The second is with respect to Bitcoin’s volatility, with Pomp remarking that since it was a highly volatile market, the coin could witness a significant fall before being valued at $100,000. He stated,
“I anticipate that there will be numerous 20-30% drawdowns from new all-time highs as the asset continues to appreciate in value. These mini-boom/bust cycles should not cause panic, but rather need to be understood as natural market dynamics whenever an asset gains significant value in short periods of time.”
Further, the partner of the investment firm stated that the rise would be driven by several catalysts. This includes institutional adoption, exchange-traded funds and retail product approvals, global instability, governments all across the globe manipulating currencies, markets and economy. He went on to state,
“The market cap of Bitcoin will reach $2+ trillion when Bitcoin is worth $100,000. This is less than 1/3 the market cap of gold and less than 1/40 the global money supply.”
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