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Blame Game: NYSE-Backed Bakkt’s Delayed Launch Is Not CFTC’s Fault

Blame Game: NYSE-Backed Bakkt’s Delayed Launch Is Not CFTC’s Fault

Blame Game: NYSE-Backed Bakkt’s Delayed Launch Is Not CFTC’s FaultIt’s a matter of when, not if, the regulated bitcoin futures exchange will launch. | Source: Shutterstock Get Exclusive Analysis and Investing Ideas of Future Assets on Hacked.com. Join the community today and get up to $400 in discount by using the code: “CCN+Hacked”. Sign up here. Get Exclusive Analysis and Investing Ideas of Future Assets on Hacked.com. Join the community today and get up to $400 in discount by using the code: “CCN+Hacked”. Sign up here.By CCN: Bakkt, the moon-shot bitcoin bet of trading behemoth Intercontinental Exchange (ICE), still can’t get approval from the U.S. Commodity Futures Trading Commission (CFTC). Many now believe its hopes depend on getting a much-hated BitLicense from New York.Are U.S. regulators trying to kill Bakkt?No.Congress makes the laws. If the laws suck, Congress is supposed to fix them. Regulators exist solely to make sure everybody follows the laws.In this case, the laws suck, but that’s not the CFTC’s fault.The Problem With BakktThe CFTC says Bakkt should follow rules for commodities that need somebody to deliver and store actual physical products for traders. Think corn and copper, “real” things that take up actual space.Those rules are designed to protect traders from theft and manipulation. For example, when corn dealers fluff the bushels or copper dealers fudge with the purity.Certainly, this doesn’t make sense for cryptocurrency. You can’t debase cryptocurrency or dupe the blockchain.Bakkt would prefer not to carry the costs and complexities that come with those outdated rules, but what can it do? Rules are rules, and the CFTC must enforce them.Does this mean Bakkt is doomed?No.The CFTC understands the rules don’t make sense, and it’s working with Bakkt to figure out a solution.In response to the CFTC’s foot-dragging, Bakkt is pursuing a BitLicense from the state of New York.This will take a long time, but it may solve the whole problem. Once it has a BitLicense, Bakkt can ask the CFTC to approve its bitcoin futures under a process that recognizes state banking licenses.While this might sound really complicated, remember that government agencies can’t create laws. Congress does that. CFTC can only do what the law says.Bakkt is UndeterredBakkt continues moving forward. Earlier this year, it raised $182 million in private investment capital, acquired part of Rosenthal Collins Group to improve its administrative operations, and cemented a long-rumored partnership with Starbucks. It just hired Google and PayPal vet Mike Blandina to join an executive team that features former top officials from Coinbase, WorldPay, and ICE.Nobody’s ever done what Bakkt’s trying to do: create a massive, regulated, global cryptocurrency exchange with a full suite of enterprise-grade investment services, fiat-to-crypto-to-fiat payment services, and secure storage of cryptocurrency assets.Bitcoin futures are the first step, but Bakkt’s ambitions go much further. It’s building a top-notch trading infrastructure tailored for the unique needs of cryptocurrency traders. Additionally, it’s run by a highly regarded parent company boasting a long history of success. Most importantly, its backers have lots of money and powerful political connections.It will open. It may take a little more time than you’d like, but it will open.Let’s hope it’s worth the wait. About The AuthorMark HelfmanMark Helfman is author of Consensusland, a book about a country that runs on cryptocurrency. He was an aide for several Congresspeople, including Nancy Pelosi, before joining the U.S. civil service. His views do not represent the views of any U.S. government agency. See what else he’s writing about at markhelfman.com
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Bitcoin Beats Other Cryptos in ‘Smarter’ Bull Market, Says Billionaire Investor

Bitcoin Beats Other Cryptos in ‘Smarter’ Bull Market, Says Billionaire Investor

Bitcoin Beats Other Cryptos in ‘Smarter’ Bull Market, Says Billionaire InvestorBitcoin’s dominance will only be more pronounced in this bull market and that’ll show in its value, according to Mike Novogratz. | Source: ShutterstockBy CCN: Mike Novogratz, the billionaire CEO of Galaxy Capital and a former hedge fund manager at Fortress Investment Group, believes alternative cryptocurrencies, or altcoins, will be outperformed by bitcoin in the bull market.Not this time. Market getting smarter. $btc will outperform.— Michael Novogratz (@novogratz) May 19, 2019The statement of Novogratz comes after the bitcoin price risen by more than 115 percent year-to-date against the U.S. dollar, leading the crypto market to add $124 billion to its valuation.Will bitcoin continue to outperform altcoins?Historically, altcoins have relied on the price trend of bitcoin and have rarely demonstrated independent price movements in extended time frames.Altcoins typically surge in value when the bitcoin price shows stability at a tight price range, leaving investors to take high-risk and high-return options over the dominant cryptocurrency.The optimism towards bitcoin, despite the emergence of sophisticated altcoins, is well founded due to the involvement of major financial institutions in the likes of Fidelity and TD Ameritrade building infrastructure on top of bitcoin.Fidelity and ICE, the parent company of the New York Stock Exchange, are initially launching custodial services for bitcoin, targeting institutional investors.According to TD Ameritrade’s executive vice president Steven Quirk, tens of thousands of clients at the brokerage already trade crypto assets in some capacity.But, traders suggest that if the sentiment around the crypto market remains overwhelmingly positive, investors will eventually explore alternative opportunities for high-return trades, which then may fuel a rally for altcoins.One cryptocurrency trader said that bitcoin is likely to climb further throughout 2019, triggering a healthy market for altcoins:The rest of this year will be characterized by rapid BTC advances, healthy corrections and periods of sideways price action, when altcoins will fly. Put that nonsense rhetoric about waiting for capitulation and still not making our bear market lows away. Wrong cycle.Full on degen altcoin season still on track for June. Next few weeks, as BTC finds a range, we’ll continue to see the popular altcoins bounce back 1st. In June, all altcoins across the board will bounce back hard. More disbelief on its way.The concern of some investors like Novogratz on the prospect of a booming market for altcoins is that many retail investors were hurt in the 2017 bull market taking high-risk trades, trading against stable assets like bitcoin.As the market matures and as investors in the market become smarter, Novogratz indicated that the appetite for altcoins could decline.The crypto market has added more than $100 billion to its valuation year-to-date (source: coinmarketcap.com)Similarly, Jeff Sprecher, the chairman of the New York Stock Exchange, said in November 2018:Somehow bitcoin has lived in a swamp and survived. There are thousands of other tokens that you could argue are better but yet bitcoin continues to survive, thrive and attract attention.At the time, Sprecher emphasized that Bakkt, a futures market operator created by NYSE’s parent company ICE, will focus on building a regulated infrastructure for bitcoin first ahead of other assets.Sentiment is generally positiveOn May 17, as CCN reported, the bitcoin price plummeted by 18 percent within hours following an unexpected 5,000 BTC sell order on Bitstamp that led prices of bitcoin and ethereum to crash on BitMEX.The market absorbed the abrupt decline in the bitcoin price fairly well, indicating that the confidence in the near-term price trend of crypto assets remains strong.While investors have cautioned that bitcoin has shown oversold conditions in recent weeks as it surpassed key resistance levels, the momentum of the asset could prevent it facing a large correction some expect would occur in the near-term. About The AuthorJoseph YoungHong Kong-Based Finance and Cryptocurrency Analyst. Contributing regularly to CCN and Hacked. Providing unique insights into the crypto and fintech space since 2012.This article was edited by Samburaj Das.
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Bitcoin’s price has pumped beyond its ‘intrinsic value,’ JPMorgan says

Bitcoin’s price has pumped beyond its ‘intrinsic value,’ JPMorgan says

Banking behemoth JP Morgan Chase & Co. has taken another shot at Bitcoin, BTC claiming the cryptocurrency‘s latest rally has pushed its price beyond its “intrinsic value.”
“Over the past few days, the actual price has moved sharply over marginal cost,” JPMorgan analysts wrote in a note obtained by Bloomberg. “This divergence between actual and intrinsic values carries some echoes of the spike higher in late 2017, and at the time this divergence was resolved mostly by a reduction in actual prices.”

To come to this conclusion, the JP Morgan team treated Bitcoin as a commodity, calculating its “cost of production” based on a number of factors, including estimated computational power, electricity expense, and hardware energy efficiency.
“Defining an intrinsic or fair value for any cryptocurrency is clearly challenging,” the analysts continued. “Indeed, views range from some researchers arguing that it has no fundamental value, to others estimating fair values well in excess of current prices.”

Bitcoin‘s price briefly dropped from almost $8,000 to $7,050 on May 17, after $250 million of long positions got liquidated on BitMEX. Since then, BTC has surged back to $7,893 at the time of writing.
By now, JP Morgan has made a habit out of thrashing Bitcoin and cryptocurrencies. Back in 2017, CEO Jamie Dimon called the currency a “fraud” – a statement he later softened, suggesting he simply doesn’t care about Bitcoin. Since then, JP Morgan launched its own blockchain-based “digital currency,” which was neither a cryptocurrency, nor a stablecoin.

Published May 20, 2019 — 11:54 UTC

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