News Crypto Hits 3-Month Low as Senate Hearings Begin

Crypto Hits 3-Month Low as Senate Hearings Begin

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By Gaurav S. Iyer, IFC Published : February 6, 2018

Ethereum
credits:istock.com/allanswart

Ethereum News Update

It is no surprise that Ethereum prices fell 5.5% on Tuesday morning, given that U.S. senators will place cryptocurrencies under the microscope today.

More specifically, the U.S. Senate Committee on Banking, Housing, and Urban Affairs will hear testimony from two of the most important regulators on the planet: Jay Clayton of the U.S. Securities and Exchange Commission (SEC) and J. Christopher Giancarlo from the Commodity Futures Trading Commission (CFTC).

Together, Clayton and Giancarlo oversee cryptocurrencies within the U.S.

Both have launched lawsuits against shady crypto organizations, while also stressing the need for continued innovation. It is a tightrope position—lean too much in either direction and catastrophe ensues.

As a result, Clayton and Giancarlo might tackle specific issues during their speeches.

We got an early look at their testimony this morning. One of the targeted issues is “FOMO”—otherwise known as the “fear of missing out”—and the opportunities it presents to con artists.

“Fraudsters and other bad actors prey on this enthusiasm,” Clayton will tell the committee, according to his published remarks. But that doesn’t mean he is opposed to cryptos en masse. In fact, his statements were streaked with optimism. (Source: “Testimony by Jay Clayton, Chairman, Securities and Exchange Commission,” U.S. Senate Committee on Banking, Housing, and Urban Affairs, February 6, 2018.)

“To be clear, I am very optimistic that developments in financial technology will help facilitate capital formation, providing promising investment opportunities for institutional and Main Street investors alike,” he said.

I found this reassuring. It means that regulators see cryptos as a legitimate financing tool for young startups, even if they disapprove of its virtual currency ambitions.

Ethereum Price Chart

eth price chart for 6 feb

Furthermore, use-cases that center around identity verification and trustless contracts are catching the right kind of interest. Clayton said these developments supply regulators with more information, “thereby facilitating our regulatory mission.”

Another statement that stood out was Giancarlo’s assertion that Congress would have to tweak some laws if they want to start a crypto crackdown.

“The CFTC does NOT have regulatory jurisdiction over markets or platforms conducting cash or “spot” transactions in virtual currencies or over participants on those platforms,” says his public testimony. “Any extension of the CFTC’s regulatory authority to virtual currency spot markets would require statutory amendment of the CEA.” (Source: “Written Testimony of J. Christopher Giancarlo, Chairman, Commodity Futures Trading Commission,” U.S. Senate Committee on Banking, Housing, and Urban Affairs, February 6, 2018.)

In all, investors should be encouraged by these statements. Clayton and Giancarlo might take a stern tone against cryptos, but they don’t appear willing to stand in the way of progress. That’s a really, really good thing.

Analyst Take

I know that ETH prices are falling fast. It’s terrifying to see the Ethereum to USD exchange rate drop to nearly half of what it was a month ago. But I don’t think the slump will last. The storm clouds can move on, some currencies can fail, and investment can rotate toward the platforms that yield useful applications of blockchain technology.

This is the basis of our $1,500 Ethereum price forecast. It is a simple, albeit powerful one.



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