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Free Markets and the Future of Blockchain

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J. Christopher Giancarlo is Chairman at U.S. Commodity Futures Trading Commission, the agency of the US government that regulates futures and options markets.


This will be the last time I speak to you from the CFTC.

Nevertheless, before I go, I wanted to share some thoughts, which I have been saving. My five years at the Commission have been an immense privilege. In the time that I have served, I have learned a lot about the issues facing America’s farmers, ranchers, producers, energy firms and other users of commodity futures who depend on the CFTC-regulated markets for their risk management needs.

It has also been my honor to work on so many issues close to the hearts and minds of the crypto community, not least of which are: virtual currencies, distributed ledger technology (DLT) and fintech broadly. I am appreciative for the time I had to serve as chairman and especially humbled by the moniker of “Crypto Dad” that I was given by this fantastic community of vibrant, bright, ambitious people.

I look back on my time at the Commission since first being sworn in back in 2014, and I marvel at the swift pace of change in issues facing the agency. When I first joined as a Commissioner, the CFTC was just coming off five intense years of feverishly writing Dodd-Frank rules to reform Wall Street in the wake of the biggest financial crisis in America in more than 70 years.

I could not have predicted at the time that virtual currencies, DLT and fintech would become such a major part of the conversation for our agency. I feel fortunate to have been at the helm during this time to be a voice in government to quiet some of the fears and calls to dismiss or squash this new technology.

I recently identified several factors that are challenging the work of regulators: the extraordinary pace of exponential technological change, the disintermediation of traditional actors and business models, and the need for technological literacy and big data capability.

I said that the CFTC’s response to rapidly changing markets and technological developments, including blockchain technology and cryptocurrencies, is built upon the following four cornerstones:

  • Adopting an “exponential growth mindset” that anticipates the rapid pace of technological innovation and the need for an appropriate regulatory response
  • Becoming a “quantitative regulator” able to conduct independent market data analysis across different data sources, including decentralized blockchains and networks, without being reliant on self-regulatory organizations and market intermediaries
  • Embracing “market-based solutions” to determine the value of technological innovations, as we witnessed with the launch of crypto-asset-based futures products
  • Establishing an internal fintech Stakeholder to address the opportunities and challenges that fintech presents and manage the ever-present tension between innovation and regulation.

Pace of change

With this audience, I never needed to make the argument that the 21st-century digital transformation is well underway – you already knew that, because you are the leaders of this change.

Therefore, it comes as no surprise to this audience that, just as our lives are being transformed, so the world’s trading markets are going through the same digital revolution from analog to digital, from human to algorithmic trading and from stand-alone centers to interconnected trading webs. Emerging digital technologies are impacting trading markets and the entire financial landscape with far-ranging implications for capital formation and risk transfer.

It has been a core belief during my tenure as Chairman that in order for the CFTC to remain an effective regulator, it must keep pace with these changes, or our regulations will become outdated and ineffective. I am pleased to say that over the last two years, the CFTC has been no bystander to the digitization of modern markets.

Many of you have already met with LabCFTC, the initiative we launched to put our agency at the forefront of the digital transformation so that we could be more accessible to market innovators, as well as more proactive in our understanding new technologies. Since it was launched two years ago, LabCFTC has had over 250 separate interactions with innovators big and small. It conducts “lab hours” in places where innovators work:  from Silicon Valley, California to Silicon Hills, Texas and from the South Bank of London to Singapore Center.

LabCFTC is not a “sandbox.” It does not try to pick winners from losers.  Instead, LabCFTC provides us both an internal and external technological focus. Internally, it means explaining technology innovation to agency staff and other regulators and advocating for technology adoption. Externally, that means reaching out and learning about technological change and market evolution, while providing a dedicated liaison to innovators.

I am proud to say that LabCFTC has become a category leader. Every U.S. federal financial regulator has either created or is creating a program similar to it.

In a few more weeks the world will mark the 500th anniversary of the death of Leonardo Da Vinci.

One of the powerful lasting figures of the Renaissance his cross-disciplinary genius gave us art, architecture and invention. Da Vinci was uniquely gifted and positioned in history to be present at a time when people’s thinking around life moved from something that had to be short and brutish toward something that could be enjoyable.

The Renaissance was a time of education and study when people attempted to improve the world through the power of ideas. I do not think I am being too bold when I say that we are in such a time again. A boldness to innovate is at the center of the technology revolutions of big data, DLT and AI.

The combination of these technologies and others still yet unimagined will standardize and distribute data to market participants and regulators while bringing tremendous efficiencies. These technologies will also bring amazing advances to other areas of our world as well, such as international trade, charitable endeavors, health care, social services and more.

Protecting Free Markets

I believe we are at a tipping point, where innovation will help us rise to meet our greatest challenges.

As we consider potential solutions to these great challenges, I think it’s important to view them through the prism of an enduring ideal, which is the value proposition of free market capitalism.

The proposition is that broad and sustained prosperity generally occurs wherever in the world there are open and competitive markets, free of political interference, combined with free enterprise, personal choice, voluntary exchange and legal protection of person and property. Free markets and innovation are natural partners in this respect.

Under free market capitalism, well-regulated and well-ordered trading activity is considered a forum of human self-expression and economic advancement. Freedom to act in the marketplace is a part of freedom itself. Billions of consumers, following their own self-interests and individual needs, make the decisions that direct the future, not have it directed for them.

For an emerging generation fascinated by crowdsourcing, free capital markets are the ultimate in crowd-sourced decision making. Free market capitalism is not a source of misery and oppression; free market capitalism is the antidote. It is unmatched in alleviating global poverty and unlocking human potential.

We must disabuse ourselves, our peers, and future generations of the notion that there is anything attractive or aspirational about political control of markets and human enterprise. Everywhere it has been tried, it has been a fraud and a failure. It crushes human liberty and society. It steals power from individuals and families and gives it to government and government elites. It enables abuse by a select few who exercise unbridled power over many.

For innovators, controlled economies are dream destroyers. Free markets should be the natural choice of today’s innovators, who today are striving to build bright and better futures.

I personally hope that we can renew faith in free markets for ourselves and our children. We must not be intimidated, but be confident. With the proper balance of sound policy, regulatory oversight, private sector innovation and a little bit of courage, new technologies and global trading methodologies will lead our markets to evolve in responsible ways, and continue to grow the economy and create a future of untethered aspiration, a future where creativity and economic expression is a social good in its own right, a source of human growth and advancement.

Washington DC image via Shutterstock

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Smart contract platform Fantom chooses Binance Chain for interoperability

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Binance Chain, the blockchain from cryptocurrency exchange company Binance, and DAG-based smart contract platform, Fantom, announced today they will be working together to create a multi-asset and cross chain ecosystem.

The Fantom team said it will be supporting a multitude of tokens including the ERC-20 standard, native Fantom token (FTM) standard, along with the BEP-2 token standard on Binance Chain.

“Our reason for choosing Binance Chain as our interoperability partner over any other blockchain is simple, we’re seeing an increasing trend of great projects moving towards Binance Chain, and we want to contribute to the Binance Chain ecosystem so that all these great projects may garner added value from our contributions. Binance and Binance Chain are in a rare position of having the strongest centralized exchange and liquidity on one end, and a very cohesive decentralized ecosystem on the other end, and we believe that there is no better partner for Fantom in its push for greater interoperability within the industry.”

The Fantom Foundation

The collaboration will offer Fantom users a chance to transact and trade FTM while being in custody of their own tokens on Binance DEX.

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Robinhood Opens Trading for 7 Cryptocurrencies in New York

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Robinhood, the popular stock and crypto investing app, has officially launched bitcoin, ethereum, and other cryptocurrency trading in New York.

Silicon Valley-based Robinhood received a BitLicense from the New York Department of Financial Services (NYDFS) in January 2019 and on Thursday opened access to crypto trading in the Empire State.

From the press release:

Currently, you can invest in seven cryptocurrencies on Robinhood Crypto: Bitcoin, Bitcoin Cash, Bitcoin SV, Ethereum, Ethereum Classic, Litecoin, and Dogecoin. You can also track price movements and news for those and 10 additional cryptocurrencies.

New York is unique and problematic for crypto traders because all purveyors must apply for a BitLicense, most notably for companies that are “storing, holding, or maintaining custody or control of virtual currency on behalf of others,” according to NYDFS.

Many crypto startups have avoided the requirements entirely by becoming BitLicense refugees and refusing to do business in the state.

“Here we are two miles from the Statue of Liberty and you cannot sell CryptoKitties in the state without that license. That’s the absurdity of what’s happened here,” ShapeShift CEO Erik Voorhees complained in 2018 when asked about the controversial license at CoinDesk’s Consensus conference in New York.

Image courtesy of Robinhood

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Generation Bitcoin: 90% of Millennials Prefer Crypto to Gold: ETF Expert

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By CCN: The US investing industry stands on the precipice of a dramatic upheaval that could see bitcoin and other cryptocurrency assets replace gold in investor portfolios.

That’s according to Nate Geraci, president of the ETF Store, an independent investment advisor. He revealed in a Bloomberg TV interview that his millennial clients are clamoring to hold bitcoin in their portfolios – if only the SEC would let them.

Crypto in a Landslide: ETF Expert Says Millennials Plan to Kick Gold to the Curb

Responding to a question from Bloomberg analyst Eric Balchunas about whether he would ever invest client funds in a bitcoin ETF, Geraci stunned his fellow panel members when he said that millennial investors overwhelmingly desire to hold bitcoin instead of traditional hedge assets like gold.

How overwhelming? Ninety percent.

“When we talk to our younger clients – we have a core gold allocation in our portfolios, and they’ll ask about that and say, ‘What about crypto?’ And if you talk to, primarily millennials, and ask them which they prefer, bitcoin or gold, it’s a landslide. It’s not even close, it’s like 90% prefer bitcoin.”

Geraci’s bold claim was more anecdotal than scientific, but there’s plenty of hard data that demonstrates that younger investors are vastly more comfortable with holding cryptocurrency in their portfolios than investors who grew up in the pre-digital era.

In April, a Harris Poll survey found that 18 to 34-year-olds are “very” or “somewhat” likely to purchase bitcoin within the next five years. That might not seem overwhelming, but consider that only 37% of Americans in that demographic currently own stocks.

Similarly, a February eToro survey found that 43% of millennials trust crypto exchanges more than stock exchanges, even though crypto trading platform hacks dominate the mainstream news cycle.

ETF Would Reduce Crypto Investing Risks

bitcoin etf vaneck bitcoin price

ETF Store President Nate Geraci said that there is rabid demand for a bitcoin ETF, especially among millennials. | Source: Shutterstock

Nate Geraci further pointed to the success of the $1.5 billion Bitcoin Investment Trust (OTC: GBTC) as proof that there is sufficient market demand for a crypto ETF.

He noted that the over-the-counter product regularly trades at a staggering premium to the underlying value of its BTC assets. That’s because GBTC shares fluctuate based on supply and demand, not just the price of bitcoin. An ETF, he said, would flatten that premium and thus reduce investor risk.

“It seems a bit incongruent to me that we have that product out there trading, where investors really could get hurt if they don’t understand that premium, but we don’t have a bitcoin ETF.”

“The demand is there,” he concluded.

SEC Kicks the Bitcoin ETF Can Down the Road

Unfortunately for crypto bulls, millennials aren’t the ones manipulating the levers of the Securities and Exchange Commission (SEC), which holds unilateral authority to approve or deny bitcoin ETF applications.

The SEC, as CCN reported, continues to punt on the issue. Last week, the regulatory agency extended its long trend of delaying ruling on cryptocurrency products when it postponed its decision on the VanEck/SolidX Bitcoin ETF to August 19. Most industry insiders expect the SEC to delay the VanEck/SolidX product again, pushing its final ruling until October 18.

Dave Nadig, the managing director of ETF.com, said that he believes the SEC is still in “information gathering mode” but that there is a “reasonable chance” regulators approve the first bitcoin ETF before the end of 2019.

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Ripple Price Analysis: XRP Lost Critical 5000 SAT Support Area – What’s Next?

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Ripple’s XRP has seen a price decline totaling 6% over the past 24 hours of trading, bringing the current price for the coin down to around $0.3754 at press time. The cryptocurrency has lost a further 16% over the past 7 trading days.

This price drop largely is due to the retracement seen in Bitcoin, although XRP also has seen difficulty when priced against Bitcoin.

XRP currently is ranked in 3d place amongst the top cryptocurrency projects by market cap value, holding a $15.89 billion market cap, according to CoinMarketCap at time of publication. 

Looking at the XRP/USD 1-Day Chart:

  • Since our previous XRP/USD analysis, we can see that XRP/USD has fallen further from the $0.39 level, to where it currently is trading at around $0.375. XRP has strong resistance beneath it provided by the 200-day moving average around the $0.3615 level.
  • From above: The nearest levels of resistance lie at $0.3790 and $0.3943. If the bulls can continue further above $0.40, higher resistance can be located at $0.4235, $0.4376 and $0.4617. Above this, further resistance lies at $0.48 and $0.50.
  • From below: The nearest level of support now sits between $0.36 and $0.35. Beneath $0.35, further support is located at $0.34, $0.32 and $0.30.
  • Trading volume has dropped significantly from the average level seen during May 2019.
  • The RSI is in a precarious position as it hovers around the 50 level which indicates indecision within the market. If the RSI drops beneath 50, we can expect XRP/USD to head lower.

xrpusd_may23-min

Looking at the XRP/BTC 1-Day Chart:

  • Against Bitcoin, we can see XRP/BTC has now dropped further beneath the support at 5000 SAT to where it currently trades at press time, around 4850 SAT.
  • From above: The nearest level of resistance now sits at 4910 SAT, 5000 SAT and 5090 SAT. Above 5100 SAT, further resistance exists at 5571 SAT, 5962 SAT and 6000 SAT.
  • From below: The nearest level of support lies at 4731 SAT. Beneath this, further support is expected at 4500 SAT, 4323 SAT and 4000 SAT.
  • Trading volume has also significantly declined toward the second half of May 2019.
  • The Stochastic RSI suggests that price action will head further lower due to a bearish crossover in overbought conditions.

xrpbtc_may23-min

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Ripple Price Analysis: XRP Lost Critical 5000 SAT Support Area – What’s Next?

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Ripple’s XRP has seen a price decline totaling 6% over the past 24 hours of trading, bringing the current price for the coin down to around $0.3754 at press time. The cryptocurrency has lost a further 16% over the past 7 trading days.

This price drop largely is due to the retracement seen in Bitcoin, although XRP also has seen difficulty when priced against Bitcoin.

XRP currently is ranked in 3d place amongst the top cryptocurrency projects by market cap value, holding a $15.89 billion market cap, according to CoinMarketCap at time of publication. 

Looking at the XRP/USD 1-Day Chart:

  • Since our previous XRP/USD analysis, we can see that XRP/USD has fallen further from the $0.39 level, to where it currently is trading at around $0.375. XRP has strong resistance beneath it provided by the 200-day moving average around the $0.3615 level.
  • From above: The nearest levels of resistance lie at $0.3790 and $0.3943. If the bulls can continue further above $0.40, higher resistance can be located at $0.4235, $0.4376 and $0.4617. Above this, further resistance lies at $0.48 and $0.50.
  • From below: The nearest level of support now sits between $0.36 and $0.35. Beneath $0.35, further support is located at $0.34, $0.32 and $0.30.
  • Trading volume has dropped significantly from the average level seen during May 2019.
  • The RSI is in a precarious position as it hovers around the 50 level which indicates indecision within the market. If the RSI drops beneath 50, we can expect XRP/USD to head lower.

xrpusd_may23-min

Looking at the XRP/BTC 1-Day Chart:

  • Against Bitcoin, we can see XRP/BTC has now dropped further beneath the support at 5000 SAT to where it currently trades at press time, around 4850 SAT.
  • From above: The nearest level of resistance now sits at 4910 SAT, 5000 SAT and 5090 SAT. Above 5100 SAT, further resistance exists at 5571 SAT, 5962 SAT and 6000 SAT.
  • From below: The nearest level of support lies at 4731 SAT. Beneath this, further support is expected at 4500 SAT, 4323 SAT and 4000 SAT.
  • Trading volume has also significantly declined toward the second half of May 2019.
  • The Stochastic RSI suggests that price action will head further lower due to a bearish crossover in overbought conditions.

xrpbtc_may23-min

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