Senate Hearing Gives Much Needed Boost to Cryptocurrencies

Cryptocurrencies are recovering fast after a devastating crash. Bitcoin is now trading above $8,000 on major exchanges like Bitcoin and Bitfinex. This comes after a Senate Banking Committee meeting on Thursday which struck a cautiously optimistic tone about the industry. The news, coming after crackdown by China and India is a welcome relief for a market seeking to restore confidence.

In the meeting Jay Clayton Chairman , Securities and Exchange Commission (SEC) and Chairman J. Christopher Giancarlo,  Commodity Futures Trading Commission (CFTC) urged the legislators to approach the industry cautiously in their carefully prepared remarks.

Giancarlo was particularly upbeat about the prospects of the underlying blockchain technology even going as far as saying there would be no “blockchain without bitcoin.”

Giancarlo and Clayton warned legislators against acting too quickly. He however raised concerns about the need to tame ICO frauds taking advantage of the craze. At the same time, he defended bitcoin’s value, enumerating on the elaborate process of mining.

High volatility raises doubts about its usefulness however, he noted.

Many analysts have pointed out the need for regulation to stabilise and ensure the continued growth of cryptocurrencies.

Giancarlo was quick to point out that cryptocurrency exchanges were unregulated by the CFTC unlike other securities. “To be clear, the CFTC does not regulate the dozens of virtual currency trading platforms here and abroad,” he said.

“I think our Main Street investors look at these virtual currency platforms and assume they are regulated in the same way that a stock is regulated and, as I said, it’s far from that and I think we should address that.” Clayton said.

At the same time, he said he was of the view that ICOs were securities and warned those playing with the semantics that they are “squarely in the crosshairs of our enforcement provision.”

Prices Shooting Up

Prices shot up during and immediately after the hearing in what could have otherwise been a devastating blow to the market. Most cryptocurrencies lost more than half their value since Friday’s amid crackdowns in China and India as well as the controversy surrounding Tether, a stablecoin used by many exchanges. Allegations have been floating that the cryptocurrency was  used to inflate prices.

Credit card companies have also been barring customers from making purchases amid a flurry of claims from the crash. It is not yet clear how banks will deal with the situation. Lloyds, in one the latest to reject cryptocurrency transactions.

Bitcoin has gained 24% while second placed ethereum has gone up 30% to trade at $815 a unit. A unit of Litecoin now sells for $148 after gaining 29% from yesterday’s trading. The cryptocurrency now occupies the fourth spot by market capitalisation.

Litecoin was briefly relegated to eight position during the dip. NEO is one of the biggest gainers after gaining more than 50% in an impressive recovery. NEO now has a market cap of more than $7.4 billion is now ranked eighth.

Santiment (SAN), iExec (RLC) and Ox (ZRC) have posted similar gains with 53%, 56% and 48% respectively over a 24-hour period.