Cointelegraph By Marc Powers
Powers On… is a new monthly opinion column from Marc Powers, who spent much of his 40-year legal career working with complex securities-related cases in the United States after a stint with the SEC. He is now an Adjunct Professor at Florida International University School of Law, where he teaches a course on ‘Blockchain, Crypto and Regulatory Considerations.’
Dear Readers: Here is my first opinion piece for Cointelegraph since my retirement a month ago from law firm practice (and prior to that, the SEC) after a 40 year career. It is an exciting opportunity for me, and hopefully an interesting one for you. The shackles of politically correct, business sensitive communications are now gone, and I no longer have to ‘pre-clear’ or worry about the potential of my words offending regulators, politicians, colleagues, or clients of my law firm.
You will be hearing my personal and (mostly) objective views, which will be free from material conflicts. I seek no business from you for this endeavor. I only seek to be read, and perhaps stimulate dialogue to influence the actions of others — whether regulators, businesses, or legislators — to promote the advancement and adoption of blockchain technology, its use cases for businesses and banked and unbanked populations, and the safe and responsible regulation of cryptocurrencies.
My first column is on where I see the United States in comparison to the rest of the world in its accommodation, acceptance and adoption of blockchain, Bitcoin and other cryptocurrencies.
I start on this important topic because I worry that the United States, and its institutions and regulators may, by their actions and inactions, and whether by design or otherwise, be undermining the development, use and availability of digital assets for citizens of this country. And this could be to the detriment of us all.
These actions include generally hostile Congressional hearings on blockchain and Facebook’s Diem, née Libra; as well as SEC enforcement actions which continue to target the ICOs of 2017 and 2018; and FinCEN regulations proposed the week before Christmas seeking to require regulated financial institutions and MSBs to disclose virtually all cryptocurrency transactions and information on the institution’s customers and counterparties involving unhosted digital wallets.
The only bright spots have been the thoughtful writings and speeches by SEC Commissioner Hester Peirce and actions by the recently departed acting Comptroller of the Currency, Brian Brooks, in allowing financial institutions to custody digital assets and use blockchains for financial transactions.
What most politicians and regulators in the U.S. fail to appreciate is that while we stifle blockchain advancement and the use of cryptocurrencies for capital formation, there are other countries and jurisdictions which welcome and embrace it. In failing to adapt, the U.S. faces the real risk that this new technology will be “owned” by other countries, some of which may be adversaries and competitors.
In China, there is the People’s Bank of China’s digital currency and electronic payments project. That pilot, using digital currency and wallets issued by China’s Central Bank, has reportedly processed over three million transactions totaling over $160 million as of last November.
In Switzerland, not only has the country encouraged blockchain adoption, but the city of Zug implemented blockchain for both government and residential use.
In Sweden and Georgia, land registries are on the blockchain.
Capital raising is the lifeblood of many developers, entrepreneurs and blockchain companies. It is essential for the health and expansion of blockchain projects and their communities. The mechanism of choice is often an offering of digital tokens. Yet, many U.S. politicians and regulators have a myopic and provincial view embracing the thought that all which occurs in blockchain transactions must be adopted by, or guided by, U.S. policy views.
But guess what? As many regular readers of this publication, or investors in Bitcoin and other cryptocurrencies know, every day there are financial transactions occurring worldwide over the internet and various blockchains, with no government oversight or approval. Immune to, and regardless of, what Congress, the SEC, CFTC, FinCEN and the U.S. Fed says or wants. These currencies represent living entities and businesses that have vibrant lives beyond these shores.
At the time of writing, CoinMarketCap lists thousands of cryptocurrencies on its platform. These tokens are traded on dozens of exchanges, many of which are not registered in or regulated by the United States. And while the U.S. equity markets primarily trade from 9:30 a.m. to 4:00 p.m. EST Monday through Friday, tokens never stop trading. They don’t know the difference between weekdays and weekends. They’re bought, hoarded, traded and shared between both sophisticated and unsophisticated investors and traders all around the world.
The U.S. has sought, and may continue to seek, to stop this with new laws and regulations: But this is an exercise in futility. The cat is not only out of the bag, it is feasting lavishly at the table.
In the process of attempting to stifle innovation, the U.S. will lose world dominance for the U.S. Dollar and the power and influence of its political and economic institutions. Acting Comptroller Brooks aptly wrote parting words and advice to the new Biden Administration in The Hill last month: “[i]f the United States focuses on the risks and not the benefits [of cryptocurrency and decentralized finance], we will fall behind as the global financial system is rewired.”
So, where does that leave us, with the new Biden Administration and Congress? What can we expect and what should Americans be doing to make sure the U.S. continues as the dominant player for capital formation, trading and world affairs?
A quick glance at Congress is hardly encouraging. On January 15th, House Speaker Nancy Pelosi named Representatives Alexandria Ocasio-Cortez and Rashid Tlaib to the important House Financial Services Committee, chaired by Representative Maxine Waters. Waters has not shown any obvious friendliness toward, or deep understanding of, blockchain, digital currencies and their useful applications. Ocasio-Cortez and Tlaib will likely have other issues which they will prioritize. In the U.S. Senate, neither Senators Mike Crapo nor Sherrod Brown of the Senate Banking Committee have been standouts for advancing cryptocurrencies. Although at least Brown had embraced a Central Bank digital currency and the maintenance of digital wallets for Americans at the onset of the pandemic as part of the relief bill.
The SEC will likely be under the leadership of former Goldman Sachs partner and CFTC Chairman, Gary Gensler. It is less apparent what will occur. Gensler has been a professor at MIT and has taught a class on blockchain, banking and cryptocurrencies in the business school. In reviewing some of his lectures and materials for the class, there is no question he has a full and helpful grasp on the subject matter and issues that arise from an evolving political and regulatory framework. He also wrote an opinion piece for CoinDesk a year ago on December 15, 2019, entitled “Even if a Thousand Projects Don’t Make it, Blockchain is Still a Change Catalyst.”
The Gensler writing concludes with some thoughts of encouragement:
“Though literally thousands of projects have yet to land on broadly adopted use cases, I remain intrigued by Satoshi’s innovation’s potential to spur change-either directly or indirectly as a catalyst. The potential to lower verification and networking costs is worth pursuing, particularly to lower economic rents and data privacy costs, and promote economic inclusion. Further, shared blockchain applications might help jumpstart multiparty network solutions in fields that historically have been fragmented or resilient to change.”
Yet, elsewhere in the piece he ruminates that “the question remains what uses will cryptocurrencies and blockchain have beyond acting as a catalyst of change? Beyond Bitcoin providing a scarce digital speculative store of value, and niche applications in digital exchanges, gaming, and gambling, what applications will be sustainable for cryptocurrencies as a new form of private money?”
Gensler also had a reputation as an aggressive regulator. While he accomplished much at the CFTC in fulfilling the mandates of Dodd-Frank, especially in the creation of a swaps exchange, he ruffled some feathers with other regulators and abroad. He also sued large financial institutions in enforcement actions. So it is not clear where he will set the priorities of the SEC as Chairman. One thing does seem certain, though. As an apparent believer in regulation and its enforcement, we can expect Gensler to seek broad regulation over as much of the blockchain ecosystem as his fellow Commissioners, the courts and Congress will allow.
From my point of view, over-regulation is not a good thing for blockchain and its adoption and broad acceptance. Nor is regulation by prosecution, a phrase coined many years ago in a book title by former SEC Commissioner Roberta Karmel. Reasonable and thoughtful regulation is needed.
Yes, I accept and agree that investor protection is important. But a major element in the development of blockchain technology and philosophy is to allow all people — sophisticated and unsophisticated, banked or unbanked, wealthy or poor — to interact, peer-to-peer, without government or other third-party interference.
I do not adhere to the philosophical belief which some regulators and Congressional staff have that most retirees are simple idiots and will blow their savings on cryptocurrency scams by foreign exchanges and issuers. We should not claim that for the protection of the few we must over-regulate and kill innovation in this nascent technology and industry, and thus become the enemy of the many. Smart regulation, and laws that stop crime, protect investors and businesses, and promote the best uses of blockchain technology seems right here.
In any event, education and disclosure are two of the important hallmarks of the Federal securities laws and best way to stop fraud. Not prohibiting the conduct entirely, or making it so difficult to proceed.
It will be interesting to see how things go in the coming year. Are we marching toward a coherent and sensible regulatory framework for this industry? Or toward a stifling environment that will drive innovation and economic growth overseas?
I know where I’m placing my hopes.
Want to be rich? Bitcoin’s limited supply cap means you only need 0.01 BTC
Cointelegraph By Marcel Pechman
In 10 years Bitcoin’s finite supply will be nearly exhausted, meaning holders might only need 0.01 BTC to become filthy rich.
Saving 0.01 Bitcoin (BTC) might cost only $500 today but according to the current global wealth distribution and the digital asset’s limited supply, 0.01 BTC just might be enough to make one a millionaire in the future.
According to Credit Suisse’s “Global Wealth Report 2020“, there are 51.9 million individuals with a net worth surpassing $1 million. The index considers a person’s net worth, along with their financial and real estate assets, while al deducting their debts and liabilities.
According to the report, the U.S. leads by a reasonably wide margin of 20.2 million, or 39% of the world’s total. China came in second place with 11% of the global total and Japan and the United Kingdom, France and Germany each comprised 5%.
What is interesting is that despite representing just 1% of the global population (excluding children), these millionaires own 43% of the world’s wealth.
The total household wealth of these wealthy individuals equals $400 trillion, with 53% represented by financial assets instead of real estate investments. This number varies between countries w 64% in the U.S., 44% in China and Germany, and 22% in India.
According to Credit Suisse’s individual wealth breakdown, 175,700 people were worth more than $50 million. Of these, 55,800 were worth at least $100 million, and 4,410 had wealth over $500 million.
Bitcoin’s finite supply will reach 98% in 10 years
As of March 1, Bitcoin’s total supply consists of 18.64 million BTC, leaving some 2.37 million to be mined. Ten years from now, the supply will reach 20.6 million, or 98% of the 21 million coins from the total supply.
Excluding the 1.9 million coins that haven’t been touched for over a decade, there is a maximum limit of 19.2 million BTC available for the world’s 51.9 million millionaires.
This leaves 0.37 BTC per millionaire, including the yet-to-be-mined coins. A more conservative assumption based on the currently available supply and deducting coins unmoved for five or more years results in 14.57 million BTC. This leaves a mere 0.28 BTC per millionaire, which is conservative as the number of wealthy people is likely to increase over the next 5 to 10 years.
In the future, the wealthy will fight for 0.01 BTC
In addition to the certified millionaires, there are 590 million individuals whose net worth exceeds $100,000. These people shouldn’t be disregarded as potential holders, even though their purchasing power is less.
Assuming the 43.4% global wealth proportion shown in the chart above stays the same, the global millionaires represent 6.32 million coins out of the conservative 14.57 million supply left. This ratio means there is 0.12 BTC per individual.
The remaining 590 million individuals currently worth $100,000 or higher could effectively hold another 5.9 million coins, resulting in a mere 0.01 BTC per adult.
To conclude, buying 0.01 BTC today, roughly a $500 investment at the current price, can assure one a top 13% holder position. This is equivalent to being a millionaire today, at least in terms of the percentage ownership of the total Bitcoin supply.
The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph. Every investment and trading move involves risk. You should conduct your own research when making a decision.
Bitcoin traders worry as BTC price remains pinned below $50K
Cointelegraph By Allen Scott
The price of Bitcoin (BTC) has failed to break above the psychological $50,000 resistance going into the weekend and has dropped below the $48,000 level on March 6.
Now traders are watching whether BTC/USD can break above the $50,000 level to resume the bull cycle. Conversely, a drop below the recent lows below $46,000 will likely open the door to new lower lows, which may then pose a threat to the bull run that has been in place for almost a year, at least in the short to medium term.
Pseudonymous trader Rekt Capital pointed out similar price levels to watch. If BTC fails to hold the current levels above $46,000, the trader expects Bitcoin to bottom somewhere in the area between $38,000 and $45,000 despite Bitcoin posting higher lows in recent days.
“BTC higher lows hold until they don’t,” he wrote. “Each subsequent reaction from the January HL was lesser and lesser. Could be the same now. Better to be safe than sorry by preparing for a potential breakdown from this HL.”
#BTC Higher Lows hold
Until they don’t
Each subsequent reaction from the January HL was lesser & lesser
Could be the same now
Better to be safe than sorry by preparing for a potential breakdown from this HL
— Rekt Capital (@rektcapital) March 6, 2021
One major factor that’s likely causing the current downward pressure on price is an uptick in whales’ activity. Data from CryptoQuant shows an increase in large transactions to exchanges on March 6, though miners’ activity remains relatively low.
As shown in the chart below, previous upticks in whales moving funds to exchange coincided with drops in Bitcoin price on March 3-4.
Macroeconomic headwinds for Bitcoin
As Cointelegraph reported, Bitcoin is also facing downward pressure from macroeconomic headwinds. A sharp spike in 10-year U.S. Treasury yields and a pullback in tech stocks, in particular, are weighing on cryptocurrency prices as investors flee risk-on assets.
Meanwhile, the Dollar currency index, or DXY, has broken through technical resistance, hitting the highest levels since November 2020.
Cointelegraph Markets analyst Michael van de Poppe points out that Bitcoin’s downtrend remains intact after the latest attempt to break $50,000 failed.
“This means that the trend is still down and overall weakness on the markets in the short term,” he explained. “$50,000 is so far a no-go for Bitcoin.”
However, Bitcoin, as well as gold, may see some respite soon as the DXY and Treasury yields are nearing their own technical resistance levels.
“I believe that the yields are getting topped out relatively soon including the DXY,” explained van de Poppe. “Both are in resistance areas, which means that we should be close to a top formation on these two, but also on a bottom formation for Bitcoin and gold relatively soon.”
March is often a bad month for markets and history repeats itself. So macro-wise, we’re still bullish on the cycle and heating up for continuation, despite the recent interest in yields.”
Traders speculate that Bitcoin’s price may continue to trade sideways for now
Cointelegraph By Benjamin Pirus
Bitcoin’s price has declined in recent days. While it has rebounded from its weekly lows, the asset’s trajectory remains uncertain says CryptoWendyO, a crypto trader on Twitter.
“The daily timeframe is not looking great as we are having trouble sustaining $50K,” she told Cointelegraph on Friday. “I am feeling like we will get a run to $51.6[K].”
“From there I would be cautious as rejection could lead back to the $50K -$45K range. A break down there could be a swift wick to $42-38K with a glorious recovery. Invalidation would be a sustained consolidation at $52K.”
After hitting record highs of approximately $58,360 in February, Bitcoin (BTC) dropped down to roughly $43,015 in subsequent days, based on TradingView data. The asset then rebounded up to about $52,660, before continuing its downward price action below $50,000. Bitcoin is trading at roughly $49,020 at time of publication.
Cheds, a trader on Twitter holding his CMT level I certification, expects “more consolidation from BTC above that key 42k level,” he told Cointelegraph on Friday. He also tweeted a chart of his range expectations.
“The big question is if the recent 27% correction is enough to bring us to a new high,” Cheds said. “In the meantime we will watch a tightening range on the daily of lower highs and higher lows.”
A number of technology stocks have also suffered price decline recently.
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