- February 7, 2018
- Category: News
J. Christopher Giancarlo, chairman of the Commodity Futures Trading Commission (CFTC) testified this morning, before the Senate Banking Committee, in a crowded committee room on Capitol Hill. The day’s topic was “virtual currencies,” which were described as a digital representation of value that may function as “a medium of exchange, a unit of account, and/or a store of value…(that) generally run on a decentralized peer-to-peer network of computers, which rely on certain network participants to validate and log transactions on a permanent, public distributed ledger, commonly known as the blockchain.”
Giancarlo pointed out that supporters of virtual currencies see a technological solution to the age-old “double spend” problem that has required a “trusted intermediary,” like a bank or other financial institution, capable of serving as a gatekeeper for financial transactions or other economic activities. As banks and other financial institutions continue to get caught cheating and fleecing their customers, their ongoing fight with emerging technologies has only served to reinforce investor attitudes that banks and similar institutions represent a greater expense and threat than benefit, even when compared to virtual currencies media-advertised potential danger for fraud, price manipulation, and money laundering.
Over the course of his testimony, Giancarlo noted the potential dangers of virtual currencies, but also suggested that its benefits and the benefits of other blockchain applications are very much appreciated and aren’t going away, any time soon. He suggested that this is an important and critical time for discussion, because it’s created quite a stir, yet “as of the morning of February 5, the total value of all outstanding bitcoin was about $130 billion based on a bitcoin price of $7,700. The bitcoin “market capitalization” is less than the stock market capitalization of a single “large cap” business, such as McDonalds (around $130 billion).” To put that into perspective, he pointed out that “the total value of all the gold in the world is estimated by the World Gold Council to be about $8 trillion, which continues to dwarf the entire virtual currency market size (about $365 billion).”
Giancarlo stated that “distributed ledger technology has extraordinary potential” and reiterated that they (CFTC) will not be pursuing further regulation for the currently operating cryptocurrency exchanges. “Both the SEC and CFTC agreed on these points.” In closing, Giancarlo suggested that “the CFTC believes that the responsible regulatory response to virtual currencies must start with consumer education. Amidst the wild assertions, bold headlines, and shocking hyperbole about virtual currencies, there is a need for much greater understanding and clarity.” With all the potential gains of this emerging market and all the potential of a long-in-the-tooth bull market, it seems a good time to fortify one’s portfolio with the safety and established benefits of physical gold and other precious metals. The experts at American Bullion are ready to help. Call the bullion professionals at (800) 653-GOLD (4653).
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