SEC labels Bitcoin a commodity
Regulation of the crypto market has taken a crucial move forward following comments made earlier this week by the U.S. Securities and Exchange Commission (SEC) Chairman Gary Gensler.
During an interview with CNBC, Gensler said Bitcoin should now be labelled as a commodity.
As I was quoted by Investor Ideas, Mena FN, Share Wise, StockHead and Biz Community, amongst others, the SEC Chairman’s comments have cleared up years of debate. Bitcoin is now viewed as a commodity by one of the most influential regulators in the world, just like gold, and not a security.
The U.S. financial watchdog said numerous tokens have the key characteristics of securities, thereby meaning they’re under the SEC’s jurisdiction, but not Bitcoin. Being a commodity in the U.S., the world’s largest cryptocurrency would come under The Commodities Futures Trading Commission’s oversight.
I think there are three main factors we can take away from Gensler’s interview this week.
First, the SEC is aiming to bolster Bitcoin’s long-held recognition as ‘digital gold.’ It’s often dubbed digital gold as it’s a medium of exchange, a unit of account, non-sovereign, decentralised, scarce, and a store of value, just like the precious metal itself.
It’s my view that BTC will knock gold off pole position as the ultimate safe haven asset within a generation as millennials and younger investors – the digital natives – believe it competes better.
Within the coming years, millennials will become an ever-more significant market participant, thanks to the biggest-ever generational transfer of wealth – estimated to surpass $60 trillion – from baby boomers to millennials.
Moreover, the world is becoming more and more driven by technology, and cryptocurrencies are, naturally, digital.
Another crucial factor is the record levels of money-printing as central banks across the globe aim to bolster their economies post-pandemic. Of course, you’re devaluing traditional currencies when you flood the market with extra money, so this, as well as soaring inflation, are major concerns to investors who are seeking out alternatives.
Secondly, the SEC Chairman said U.S. regulators – including the SEC and CFTC – have a lot of hard work ahead to implement detailed laws that will safeguard investors. This is a clear indication financial watchdogs are focusing on what I believe is the inevitable regulation of the sector.
As I’ve said on many occasions, proportionate regulation should be welcomed as it would help protect investors, shore-up the market, tackle criminality, and reduce the potential possibility of disrupting global financial stability.
Finally, third, the cryptocurrency sector as a whole will adopt a bullish stance in response to Gensler’s comments. So, we can expect prices to gradually move upwards.
I’m using this recent volatility as a buying opportunity and topping up my investment portfolio at a lower price point. Indeed, I’m continuing to purchase Bitcoin as I’m convinced that digital, global, borderless, decentralised, tamper-proof, unconfiscatable money is, clearly, the future.