Earlier this afternoon Treasury Secretary Steve Mnuchin held a surprise conference on the topic of cryptocurrency. As we outlined a few days ago, President Donald Trump shared his thoughts on Bitcoin and Facebook on Twitter and it gave the community the vibe that discussions were heating up. A couple years ago, many of your family & friends laughed at you for believing in the utility behind cryptocurrencies. Aside from sharing your interest, imagine 2 years ago telling these people that in 2019 the topic of crypto would be a global issue for Secretary Steve Mnuchin and the Trump administration…..
Prior to Mnuchin going live today, many “analysts” in the crypto space were warning that this could be a very bearish event for Bitcoin and other altcoins. Here at Visionary Financial, we actually stayed relatively neutral due to Bitcoins historic price action during events similar to this. As the Treasury addressed their thoughts and concerns around Bitcoin and Facebook’s planned currency, Bitcoin actually started moving north and closed at $10,895. With Bitcoin opening up the day at $10,257 it actually ended up having a quite positive ( +6.22%)
Why Bitcoin Rallied Post Mnuchin Conference?
The Secretary initially hit Crypto pretty hard towards the beginning of his speech. He mentioned that they continue to believe Digital Assets to be highly volatile and involved in illicit activities. Secretary Mnunchin could not give any specific examples during the conference today, but mentioned numerous times that they believe crypto to be involved in criminal activities at a global scale. He also stated that entities like Facebook will have to implement AML (Anti-money laundering), KYC ( Know your customer), register with FINCA and abide by all protocols that other traditional financial institutions have to if they ever want to proceed with cryptocurrency plans. The secretary stressed the fact that their administration wanted to insure that the U.S financial system was protected against fraud. Mr. Mnunchin also mentioned that Facebook “has a long way to go” but did not ever say they will not get there.
As the conference progressed, the Secretary mentioned that the administration welcomes responsible innovation that may impose efficiencies. This was about the time in the conference that you started seeing Bitcoin inching up. Basically the Secretary was more interested in companies following standard protocols to ensure safety in the financial system. There was no talk about banning or outlawing cryptocurrencies in the United States. With the way the Secretary approached this conference, it appears they are starting to understand the framework /potential behind cryptocurrency and Blockchain. The vibe from today’s conference is that they are just getting the proper teams in place in order to more effectively regulate to ensure safety in the financial systems.
It was interesting to see this conference today with other developing stories in cryptocurrency lately. It seems as if regulators are becoming much more involved. Just the other day, you saw reports about the IRS tapping tech giants ( Apple, Microsoft, Google) in order to help locate user crypto activities. You also saw the U.K starting to crack down on crypto in order to protect against financial crimes. As Secretary Mnunchin mentioned today, this is a global initiative that was agreed upon at the recent G20 summit. All counties across the globe are starting to see adoption levels spike and they want to insure the proper safety is in place while still supporting tech innovations.
Good News For XRP?
After the conference today, Brad Garlinghouse from Ripple shared his thoughts. He mentioned that Ripple / XRP is in the business of working with regulators to create better financial infrastructure. Bitcoin Vs. XRP has been one of the largest debates in Cryptocurrency land. The main issue between the communities is that Bitcoin is eliminating third parties and creating a decentralized system where finance is peer to peer. This creates an environment where its much harder to regulate the activities that are going on. On the other hand, Ripple is working directly with governments and financial institutions to help them fix issues around financial settlement and cross-border payments. You could argue today’s conference gave XRP a little bit more bullish sentiment. There were numerous reports about Facebook Libra coin outsourcing the tech behind XRP. Aside from the Banking Committee already calling for a Facebook hearing, we think it was very evident today that a lot of work will be needed for Facebook Libra to even launch. On the other hand you have Ripple / XRP piloting with banks and financial institutions for years.
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