Cryptocurrency amid a regulatory framework

Cryptocurrencies have been on the rally lately amid a regulatory framework that seems to be more friendly than the initial enforcement actions early this year made it seem.

Here, in the United States, the Securities and Exchange Commission has expressed openness to ICOs, a general desire to focus on implementing consumer protection over stifling the entire crypto industry, and debates over crypto’s status as a security that show a likely thoughtful and industry-inclusive approach.

On the private actor side, companies such as Facebook (FB) have gone from banning all crypto ads in January to now seemingly on the verge of releasing their own cryptocurrency for use on Facebook’s ever increasing platform of properties, ranging from now content streaming to reselling to dating.

Cryptocurrency appears to be chugging along, as the overall world market cap has rallied from its post-bubble low of $250 billion to now $406 billion, or 62.4%, in the past month and a half.

(Source: CoinMarketCap)

Initial post-bubble private sector actor hesitation about cryptocurrencies has appeared to be limited mostly to the retail credit and liability risks they might be exposed to rather than aversion to the industry when it may benefit themselves.

Indeed, Goldman Sachs (NYSE:GS) is now even offering advisory services for Bitcoin futures (OTCQX:GBTC) as it seeks to access a new source of trading commission revenue for its recently rebounded trading segments.

Bitcoin Is Becoming The Legacy Tech

Of particular interesting note is that amid this revival in cryptocurrency, new and remade, is that Bitcoin’s (BTC-USD) share of the overall crypto industry appears to have stayed stagnant or in fact declined.

Indeed, amid cryptocurrency’s resurgence since early April of over 62% in world market capitalization, Bitcoin has fallen from about 45% of the overall market share to about 37%.

(Source: CoinMarketCap)

Clearly, growth is coming from elsewhere. Non-Bitcoin market cap has grown from about $140 billion in early April to now $258 billion, an increase of about 84%.

(Source: CoinMarketCap)

In comparison, Bitcoin has rallied from about $6,800 per Bitcoin in early April to now $8,700 for a rally of about 28%.

(Source: CoinMarketCap)

All of these current trends are likely signs for the future of the cryptocurrency industry once all the private and government actions settle into a more stable and long-lasting framework.

Essentially what seems to be coming together are the following increasingly prevalent trends:

  • Successful cryptocurrencies will be backed by major private or government actors, likely will specific programming catering towards their own services and uses.
  • Industry-specific use cryptocurrencies are rising rapidly as a variety of sectors begin to find very specific business applications for Blockchain technology.
  • Bitcoin is continually losing and likely will lose even more relative importance as a cryptocurrency, even if its own price still fluctuates with occasional rallies.
  • The regulatory framework that comes into place will restrict heavily retail customer interaction with cryptocurrencies into much more low-risk market functions.
  • For cryptocurrency issuers, they will face far greater transparency, oversight, and regulation in all their activities.

All this essentially means that, bit by bit, the “New Crypto Economy/Market” is coming into place. This cryptocurrency market will look radically different from the free-flowing Wild West of just last year and which crashed in such fiery fashion a few months ago.

Undoubtedly, this will overall benefit cryptocurrency’s development as both a business tool and a financial asset. Once rules and regulations are in place, as they seem to be incoming across many major countries over the next few months to year or two, cryptocurrency development can be much more coherently analyzed, tracked, projected, and invested in.

It’s an exciting time for cryptocurrencies as Blockchain continues to see increasingly new and innovative uses in a wide range of industries.

What do you think?

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Written by Ravi Gupat

Ravi grew up in India and graduated in Economics. He is a serial entrepreneur who has founded and exited several companies in tech and media over the past 15 years. He is also an early stage investor and advisor in various blockchain-based companies.


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