Bakkt Still Delayed
In late 2018, there were many cryptocurrency enthusiasts and proponents that were extremely dismayed about the price of Bitcoin, and the overall state of cryptocurrency markets. Of course, there were many corporations that were looking into incorporating blockchain, and there were still major cryptocurrencies that were able to see a price rally here and there - but the overall truth was hard to deny: 2018 was very bearish in terms of price action compared to 2017, which was extremely bullish. For seasoned investors, consolidation was natural, and even to be expected, but for those that bought the top of Bitcoin; it was hard to rationalize the losses.
However, there was a light at the end of the tunnel, and that light was Bakkt. The main gripe with many crypto investors and traders was the fact that institutional money was not interested in cryptocurrency, because they considered it too volatile. However, if a regulated platform was launched by the right entities - that would all change. Intercontinental Exchange (ICE) is the parent company of the NYSE (New York Stock Exchange), one of the largest stock exchanges in the world, and apparently, they were interested in launching “Bakkt” - a global platform for trading digital assets. The fact that Microsoft and Starbucks were involved also meant that cryptocurrency might be entering the retail sector for the first time. This also meant that individuals and organizations could make “everyday” purchases with digital assets, which certainly bode well for the markets.
It wasn’t just the everyman trader that was excited about Bakkt. Tom Lee, of Fundstrat Global Advisers, named it as a major catalyst with respect to the price of Bitcoin. Specifically, he stated, in late 2017: “This new exchange called ICE Bakkt will be launched. It is going to be really one of the first regulated exchanges. I think around that, there is working being done by these major investment banks to build products to support it or work with it. I think institutions are waiting to be involved.”
Many believed that Bakkt would significantly change the price of Bitcoin, given the fact that the New York Stock Exchange has a market capitalization in the trillions. There was the belief that big institutional money would finally flow into the markets. However, Bakkt was delayed from late 2018 to early 2019.
It appears to STILL be delayed, as of press time. The ICE CEO, Jeff Sprecher, didn’t even give a timetable of when to expect Bakkt during an earnings call several days ago (February 7), simply stating that its launch would occur “later in 2019”. He also used language that might not sit well with ardent cryptocurrency supporters, as he called Bakkt a “moonshot bet”, and seemed to distance himself from the project, claiming that it was organized much differently than many of the other ICE projects (for context, ICE operates over 20 global exchanges).
Sprecher also seemed to characterize ICE as a long-term project, which means that it could be months since the project is officially launched. ICE was first announced in August of 2018.
“Crypto Mom” Optimistic About Ambiguity
For a long time now, many cryptocurrency enthusiasts have been calling for a clear regulatory framework regarding cryptocurrency in the United States. The idea here is to develop an actual clear set of laws regarding the sector, so that it can start to thrive. There are many other countries, such as China, which has cracked down on the entire sector, even though there is evidence that China is still home to many investors that are simply willing to circumvent the cryptocurrency ban. This shouldn’t come as much of a surprise, given the fact that the decentralized nature of cryptocurrency was meant to avoid the influence and power of central authorities in the first place.
However, it is clear that the United States is wavering in terms of regulation. The decision is an important one. The idea here is that legislators want to ensure that they are not promoting fraud by allowing cybercriminals to thrive in the form of scammy initial coin offerings (ICOs), while still allowing blockchain technology to thrive. Of course, just like any other political issue, there are politicians that have already taken their stance, even if their knowledge in the sector isn’t substantial. There have been significant developments on a state level, as well. It should be noted that the Wyoming Senate has essentially recognized cryptocurrency as money, and Ohio has allowed for certain tax payments to be paid in Bitcoin. This doesn’t help the overall United States regulatory framework for the sector, however.
Hester Peirce has been given the nickname “Crypto Mom” for a reason - she seems to be much more embracing of both Bitcoin and blockchain than many of her counterparts. For some context, Peirce is an SEC commissioner, and owes a large percentage of her Twitter following to cryptocurrency enthusiasts. She earnestly does believe that the SEC is judging the sector a bit too quickly, which is why many have taken to her. She notably and publicly disagreed with the idea that Bitcoin couldn’t be regulated in the summer of last year, and has comfortably settled in as a “friendly figure” in terms of U.S. cryptocurrency regulation.
She’s back at it again, and this time, a little more optimistic about the idea that no clear framework has been set. While many would decry this as a “bad thing” for the cryptocurrency markets and industry, Peirce apparently is taking a “glass half full” approach. She actually suggested that the delay in regulation might allow for more innovation. Specifically, she said, on February 8: “Ambiguity is not all bad, of course. We might be able to draw clearer lines once we see more blockchain projects mature. Delay in drawing clear lines may actually allow more freedom for the technology to come into its own.”
Peirce has quite the balancing act to do, as she has to simultaneously convince the SEC to be more open-minded regarding the cryptocurrency markets, while still making sure that investors are protected. Although it might seem like no progress is being made, time will tell whether Peirce is right about it being a good thing that regulation is delayed.
Professors Not Fond Of Crypto
Just like any other emerging technology, there are many academics that are wary of Bitcoin, just like there are many professors that believe Bitcoin has some real use-case applications that could make our world and future better. However, this past week, the rhetoric certainly seems to have been ramped up more than usual.
One particularly brutal attack came from a Harvard professor. For those that are unaware, Harvard University is widely considered not only one of the most prestigious schools in the United States, but the world, as well. One of the interesting aspects of the criticism is that it actually attacked blockchain technology, and not specifically Bitcoin. This is notable, considering that many CEOs, politicians, and influential individuals worldwide normally take the opposite approach - suggesting that they are wary of Bitcoin, but have quite the promising outlook with regards to blockchain.
The Harvard professor, by the name of Bruce Shneier - actually thinks that there is no “good reason” to trust blockchain, as he wrote in a WIRED article. Shneier is widely respected as a cryptographer and security expert, which makes this a much more hard-hitting criticism. For example, there are many finance executives and individuals involved at central banks that have taken shots at cryptocurrency, but many believe that their criticisms are motivated by their own biases. The professor seems to believe that the irreversible aspect of blockchain doesn’t exactly promote “trust” as many believe it should, noting the fact that funds can’t be reversed, like they can with banks, for example. He generalized the entire cryptocurrency community as “speculators”, suggesting that the only individuals who own cryptocurrency are simply looking for quick financial gain. He also suggests that the hype surrounding the sector will “dissipate”.
This actually wasn’t the only criticism about cryptocurrencies from an academic this week. This time, the criticism was specifically about Bitcoin, and came from an assistant professor based at Rutgers University. Her name is Karen Sharding, and her criticism was a much more measured one, as she was concerned about the “ethics” surrounding Bitcoin. It appears as though she took aim at the volatility of the digital asset, pointing out the differences between Bitcoin and fiat currency. This certainly isn't a new criticism, as many individuals, organizations, and governments are concerned about both the volatility and fraud of the cryptocurrency markets.
Scharding seemed to suggest that Bitcon undermining national currencies was a real ethical issue. Of course, those in the cryptocurrency community see this as a necessity, and point to the corruption of various central financial institutions as evidence of such. However, Scharding disagrees, stating: “It’s unethical because of how it undermines the value of national currencies, and to the extent in which national currencies undermine the safeguard of millions of people. That’s the real danger of Bitcoin.”