On 21st January 2025, the U.S. Securities and Exchange Commission (SEC) announced the formation of a new cryptocurrency task force under the leadership of President Donald Trump.
This initiative marks a significant shift in the regulatory landscape for digital assets, aiming to provide a comprehensive and clear framework for the industry.
Task force
The task force, led by Commissioner Hester Peirce, also known as ‘Crypto Mom,’ is designed to address the regulatory challenges that have plagued the crypto industry for years.
The primary objectives of the task force include drawing clear regulatory lines, providing realistic paths to registration, crafting sensible disclosure frameworks, and deploying enforcement resources judiciously.
This approach contrasts sharply with the previous administration’s reliance on enforcement actions, which often left the industry in a state of confusion and uncertainty.
The announcement has generated a wave of optimism among crypto enthusiasts and investors. The price of Bitcoin, for instance, saw a notable increase following the news, reflecting the market’s positive reception.
But before this announcement, Bitcoin was already in an upward trajectory following the positive news swirling around Trump after he won the U.S. election.
Industry leaders are hopeful that the new regulatory environment will foster innovation while protecting investors and maintaining market integrity.
Commodity Futures Trading Commission
One of the key aspects of the task force’s mandate is to collaborate with other government agencies, Congress, and international bodies to ensure a cohesive regulatory approach.
This includes working closely with the Commodity Futures Trading Commission(CFTC) and other federal departments to harmonize regulations and provide technical assistance to Congress as it considers changes to the existing legal framework.
The task force’s formation is seen as a pivotal moment for the crypto industry, signalling a more welcoming and structured regulatory environment. As the task force begins its work, the industry eagerly anticipates the development of clear and practical guidelines that will support the growth and maturation of the digital asset market.
Bitcoin reaches a new record high, nearing the $100,000 mark as the cryptocurrency rally marches on.
Other altcoins are rallying too, basking in the aftermath of the SEC resignation news.
Gary Gensler, Chair of the Securities and Exchange Commission, will step down on 20th January 2025 (Trumps inauguration day), an announcement made by the SEC on Thursday 21st November 2024, which clears the path for President-elect Donald Trump to appoint a more crypto friendly successor.
During Gensler’s tenure, the SEC engaged in numerous high-profile conflicts with the cryptocurrency industry, including a lawsuit against Grayscale over Bitcoin ETFs – a case Grayscale won, leading to a significant influx of capital into these funds since their inception in January.
The SEC has also pursued legal action against several major digital asset firms concerning their crypto dealings, such as Coinbase, with varying outcomes.
Additionally, the SEC has been in conflict with Tesla CEO Elon Musk, particularly regarding his acquisition of the social media company Twitter, now known as X, for $44 billion in 2022. The commission is currently seeking sanctions against Musk for failing to appear for court-mandated testimony related to this matter.
Under Gensler’s leadership, the SEC has scrutinised Musk’s adherence to a previous settlement that mandated a securities lawyer review certain Tesla-related social media posts before they were published.
Musk, a vocal critic of the SEC who supported Trump’s election campaign with his time and a donation of at least $130 million and campaigned alongside him, is poised to join the incoming administration as a co-leader of the newly proposed Department of Government Efficiency (DOGE).
With Gensler’s impending departure and the upcoming expiration of the terms for two other commissioners, Trump will have the chance to significantly influence the future composition of the SEC.
A green light for crypto investors, but a worry (maybe) for the retail trader long-term?
Bitcoin one-day chart as of 22nd November 2024 (09:49am GMT) – Snapshot
Bitcoin one-day chart as of 22nd November 2024 (09:49am GMT)
Bitcoin one-year chart as of 22nd November 2024 (09:51am GMT) – Snapshot
Bitcoin one-year chart as of 22nd November 2024 (09:51am GMT)
The price of Bitcoin is influenced by many factors, such as supply and demand, market sentiment, news events, regulations, and technical analysis.
One of the recent news events that affected the price of Bitcoin was the speculation about the approval of a Bitcoin ETF by the U.S. Securities and Exchange Commission (SEC). A spot Bitcoin ETF is an exchange-traded fund (ETF) that directly holds Bitcoin and tracks its price movements.
This would allow investors to gain exposure to Bitcoin without having to buy, store, or manage it themselves. A spot Bitcoin ETF would also increase the liquidity and legitimacy of the Bitcoin market, potentially attracting more institutional and retail investors.
Waiting approval
However, the SEC has not yet approved any Bitcoin ETF applications, despite receiving several from various financial firms, such as Blackrock and Fidelity. The SEC has expressed concerns about the risks of fraud, manipulation, and volatility in the Bitcoin market.
Bitcoin one year chart October 2022 – October 2023
The SEC has only approved one Bitcoin-related ETF so far, which is the ProShares Bitcoin Strategy ETF that tracks the price of Bitcoin futures contracts, not the actual Bitcoin. Bitcoin futures contracts are agreements to buy or sell Bitcoin at a predetermined price and date in the future. They are traded on regulated exchanges.
Rumour
On 16th October, 2023, a false rumour circulated on social media that the SEC had approved a Bitcoin ETF from Blackrock, the world’s largest asset manager. This rumour caused a surge in the demand and price of Bitcoin, which briefly breached the $30,000 mark.
However, this ‘news’ was quickly corrected by both Blackrock and the SEC, and the price of Bitcoin fell back to its previous levels. The rumour may have been fueled by the anticipation and excitement in the crypto community for a spot Bitcoin ETF approval, which many analysts believe would boost the price of Bitcoin significantly.
Crypto volatility
The false rumour about the Bitcoin ETF approval was one of the major factors that contributed to the 10% climb and subsequent drop of bitcoin on the 16th October, 2023.
Be careful
The price of Bitcoin is determined by the interaction of buyers and sellers in a global and decentralized market that operates 24/7. As such, it is subject to high volatility and unpredictability.
The price of Bitcoin is determined by the interaction of buyers and sellers in a global and decentralized market that operates 24/7. As such, it is subject to high volatility and unpredictability.
Investors should always do their own research and due diligence before investing in any cryptocurrency or any financial product.
Remember to always do your ownRESEARCH!RESEARCH!RESEARCH!
Definitions
ETF – Exchange Traded Fund is a type of investment fund that can be bought or sold on a stock exchange like a regular stock. An ETF usually holds a selection of securities, such as stocks, bonds, commodities, or currencies, that track a specific index, sector, or asset class.
Bitcoin is a type of digital currency that can be used for online transactions without the need for a central authority or intermediary. Bitcoin is based on a technology called blockchain, which is a distributed ledger that records and verifies all transactions in a network of computers. Bitcoin is created and rewarded to the participants who contribute their computing power to maintain and secure the network, a process known as mining. Bitcoin has a limited supply of 21 million units, which are divided into smaller units called satoshis.
Bitcoin is based on a technology called blockchain, which is a distributed ledger that records and verifies all transactions in a network of computers.
Bitcoin was invented in 2008 by an anonymous person or group using the name Satoshi Nakamoto, who published a white paper describing the concept and design of Bitcoin.
The first Bitcoin transaction was made in 2009, when Nakamoto sent 10 bitcoins to a computer programmer named Hal Finney. Since then, Bitcoin has grown in popularity and value, attracting millions of users and investors around the world.
Securities and Exchange Commission (SEC) is a U.S. government agency that regulates the securities markets and protects investors. The SEC was established by the passage of the U.S. Securities Act of 1933 and the Securities and Exchange Act of 1934, largely in response to the stock market crash of 1929 that led to the Great Depression.
The SEC has three main objectives: to ensure full public disclosure of information, to prevent fraud and manipulation in the market, and to facilitate capital formation for economic growth.
The SEC oversees various entities and activities in the securities markets, such as securities exchanges, brokers, dealers, investment advisers, mutual funds, corporate issuers, and securities transactions. The SEC enforces the federal securities laws by requiring companies to register their securities and disclose relevant information to the public through its electronic database called EDGAR.
The SEC also investigates and prosecutes violations of the securities laws, such as insider trading, market manipulation, accounting fraud, and disclosure fraud.
