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SEC Chairman Gary Gensler said he has no plans to ban crypto transactions.
Bill Clark-Pool/Getty Images
Bitcoin stands out from other cryptocurrencies, gaining 8% to $54,345 on Wednesday and again pushing its market value above $1 trillion.
However, other tokens are not faring as well, a sign that Bitcoin may break away from the pack. Ethereum, the second-largest crypto by market value, rose 3.3% to $3,570 on Wednesday. The smaller tokens were a mixed bag, with Cardano down 0.9%, at $2.20, and Solana down 5%, at $160.
Meanwhile, some of the biggest “meme” tokens continued to rise. Dogecoin was up 8%, at $0.2606, while Shiba Inu was up 20%, at $0.00002385. Both pieces have links with
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CEO Elon Musk, who has periodically spoken about Doge and tweeted a photo of her Shiba Inu puppy this week, helping to fuel the latest rally.
Bitcoin appears to have broken through technical resistance levels. A week ago, the crypto was trading around $45,000. It has now seen a 17% gain from those levels. It is also up sharply from lows around $30,000 this summer.
“The short-term trend is positive with higher lows reinforcing the upward push,” DailyFX analyst Daniela Hathorn wrote in a commentary.
She added that the next few days will be crucial for Bitcoin to hold onto its gains as momentum previously stalled and crashed between $50,000 and $55,000.
Beyond the technicals, Bitcoin could go through a regulatory relief rally. Securities and Exchange Commission Chairman Gary Gensler told a House hearing on Tuesday that he has no plans to ban crypto transactions, like China’s near-blanket ban.
“That would be Congress,” Gensler said in response to a question about whether the SEC would ban cryptos. He reiterated, however, that stablecoins raise “financial stability issues” and said many tokens “pass the test of being an investment contract, or a note, or some other form of security” that would subject them to SEC rules and enforcement.
House Republicans, meanwhile, appear to be lining up their support for the industry. The top Republican on the House Financial Services Committee, Rep. Patrick McHenry (R., NC), on Tuesday introduced a bill that would grant a three-year “safe harbor” to crypto developers, essentially giving them the time to prove their networks and tokens are decentralized enough, avoiding SEC registration requirements and enforcement actions.
“My bill…will help provide the legal certainty necessary for digital asset projects as they launch,” McHenry said in a statement.
Industry lobbyists including the Blockchain Association and the Chamber of Digital Commerce have also issued statements in support of the bill, called the Clarity for the Digital Tokens Act of 2021. The industry says it wants “regulatory certainty” so issuers and token networks can develop their products without the imminent threat of shutdowns by regulators.
Democrats in Congress and the Biden administration, however, may be much less likely to give the industry a pass, especially if more examples of criminal activity and “pump and dump” schemes emerge. materialize on cryptographic networks.
The prices of tiny alt-coins can be easily manipulated, trading like micro-cap stocks on low volume. Even Bitcoin – with a market value of $1 trillion – isn’t as liquid as it looks, with at least 35% of Bitcoin held on centralized exchanges.
Congress is also looking at crypto as a way to generate more tax revenue. The infrastructure bill that passed the Senate with bipartisan support in August included new tax reporting requirements for crypto brokers, networks, and wallet providers.
With Democrats taking a harder line than Republicans, the industry may not see more favorable regulations until power shifts again in Washington.
Write to Daren Fonda at [email protected]
