SEC Opens Floodgates For Institutional Investors After Landmark Decision
Cryptocurrency enthusiasts and investors gave a collective sigh of relief this week. It all came when a member of the US Securities and Exchanges Commission made comments that meant neither Bitcoin nor Ethereum deserved to be classified as securities.
The landmark decision had an immediate impact, prices briefly surging over 24 hours. In its simple explanation, the comments by the SEC’s director of corporate finance, William Hinman, have brought some relief to investors and miners.
For the last few months, the entire crypto-verse has been in a sort of limbo over what the SEC was to eventually say about Ethereum.
The anxiety was a result of the possibility that ETH could potentially be declared a security.
It would also have had far-reaching consequences for all the projects launched on the platform. The result would have impacted on crypto prices and value and scare away big-money investors Hinman said that:
“Based on my understanding of the present state of ether, the Ethereum network, and its decentralized structure, current offers and sales of ether are not securities transactions.”
More and more people are getting convinced that the SEC’s decision is opening up space nicely. Hinman may have encouraged many crypto developers when he said that it was possible other cryptocurrencies could end up “sufficiently decentralized” in coming days.
This will happen in stages, but it will get to that time when it’d mean “regulating the tokens or coins that function on them as securities may not be required.”
Similar comments were made by SEC Chairman Jay Clayton about Bitcoin. What this means is that the crypto community can now rest easy and invest in the leading coins. However, what we need to watch out for is the reaction of institutional investors.
Wall Street firms and Fund managers have over years been cautious about buying digital assets. But after this year’s Consensus 2018, strong indications have been that many investors were open to crypto investments.
Goldman Sachs and Nasdaq have already opened the way for more big money and blue-chip companies to come into crypto. But now we may see bold moves into direct investment into Bitcoin (BTC) and Ethereum.
Ethereum co-founder and CosenSys founder Joe Lubin has lauded the SEC’s move and said:
“We applaud the clarity provided by Director Hinman and the SEC today. Ether and other next-generation consumer utility tokens will continue evolving the web towards networks that are fairer, secure, and evenly distributed. ConsenSys looks forward to continuing to engage with regulators around the globe to promote responsible adoption of this transformative technology.”
It’s on the concept of responsible adoption that we may see an influx of mainstream investors from fund managers and financial institutions. We could be talking about it already as more positivity comes in from those within the industry.
Although it hasn’t been in troves yet, the feeling that Wall Street is really warming up to Bitcoin gathered some steam last May. At that time, it was reported that the New York Stock Exchange had plans to allow its customers to eventually buy and hold Bitcoin.
Goldman Sachs has also indicated that they will be offering Bitcoin futures later this year.
It may start with Ethereum Futures…
Reports carried in Bloomberg a few days ago show that there could be Ethereum Futures sooner than we expect. The president of CBOE Global Markets, Chris Concannon, has indicated that ETH futures are likely now that the SEC considers it as not being a security.
“We are pleased with the SEC’s decision to provide clarity with respect to current Ether transactions. This announcement clears a key stumbling block for Ether futures, the case for which we’ve been considering since we launched the first Bitcoin futures in December 2017.”
What the wider community is awaiting are comments and declarations concerning other digital assets like Ripple (XRP). Although it has a couple of cases pending in court, it’s still hopeful that the SEC will not declare it as a security.
If the atmosphere around the top cryptos improves significantly, then investors will flood the market. Big Money is about to enter cryptocurrency and Bitcoin and Ethereum will lead the way.