US Regulators Talk Bitcoin’s Generational Impact

As cryptocurrency evolves, so does its relationship with government.

While lawmakers in some countries seek to suppress a financial force they don’t understand, in the U.S., the reverse appears to have started to take hold, indicating an opportunity is at hand for a dialog between the industry and lawmakers.

In a Senate Banking Committee hearing this month on virtual currencies, the chairmen of the Securities and Exchange Commission and Commodity Futures Trading Commission asked Congress to consider expanding federal oversight over bitcoin. But they emphasized consumer protection without a heavy-handed ban on development of cryptocurrencies. In response, the jump in bitcoin’s price marked a gain of more than $2,000 in just over a day.

Shortly before last week’s hearing, bitcoin fell below $6,000 to $5,947.40, its lowest since Nov. 13, amid a plunge in U.S. stocks. Many observers held their breath as the committee hearing began, expecting calls for a government clampdown on cryptocurrency trading.

But instead of fear, cryptocurrency investors reacted with glee. The day brought a 26 percent recovery to bitcoin, while Ethereum managed to achieve a 30 percent return. Altogether, the cryptocurrency market cap surged by $89 billion, a 24-hour increase of 29%. Bitcoin has since been inching upward, currently hovering around $9,000.

Regulatory Issues Aren’t Black And White

While regulation is often seen as a negative by cryptocurrency enthusiasts, companies hoping to make money in this area have been looking for more guidance on cryptocurrencies. Yesterday’s hearing indicates that time could be coming soon.

Commodity Futures Trading Commission (CFTC) Chairman J. Christopher Giancarlo won the hearts of bitcoin enthusiasts with comments yesterday that appeared to be hat tips to the bitcoin community. Toward the end of the hearing, he contradicted the common misconception that bitcoin is riding the coattails of blockchain technology. He said that if there were no bitcoin, there would be no blockchain.

Lawyers who work with companies involved in cryptocurrency expressed optimism after last week’s hearing, expecting that government involvement will bring thoughtful – as opposed to overly onerous – regulation, according to Barron’s.

Bitcoin’s Generational Impact

Comments by Giancarlo and another banking committee chairman, U.S. Sen. Mike Crapo, D-Idaho, indicated the generational impact that bitcoin is having on some policymakers, as demonstrated in a Streamable video from the hearing.

Giancarlo, the father of three college-aged children, said he tried to get his children interested in the financial markets at an early age, only to realize he was fighting a losing battle.

“Something changed in the last year,” he said. “Suddenly they were all talking about bitcoin. They were asking me what I thought and should I buy it.” […]

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