Mainstreaming Of Cryptocurrency Investments? An Exploration

Siddhartha Dasgupta

August 10, 2020

The Dow Jones has rallied beyond the 25K mark in the past 4 months. That’s a staggering 7000+ points increase amid a global pandemic.

Notwithstanding the constant mention of the fact the financial markets were rallying at a time when people were losing jobs in the real economy.

Shifting focus to cryptocurrencies, the global market cap of all cryptocurrency have increased 32% in the past 3 months. This points to a larger trend that more people are pouring in money in the cryptocurrency market which has led to this surge.

Whether its financial markets or cryptocurrency markets, investors by and large haven’t lost faith in the markets. The increased faith in cryptocurrency can also be attributed to the fact that the SEC (Securities & Exchange Commission) has warmed up to Cryptocurrency after resisting and blocking them for years.

This acceptance has manifested itself in the approval of Arca Labs to offer shares in the form of digital securities.

Its important to note that ArCoin (token of Arca Labs) is composed of 80% US Treasury securities. It’s a token that takes the form of ERC-104, an Ethereum token designed to be compliant with regulators.

SEC’s tryst with Crypto

Jay Clayton, the former SEC chief was clear when he said that all cryptocurrencies should be categorized as securities and the the cryptocurrency market should be subject to certain basic regulations of the financial markets.

While he was not averse with the idea of cryptocurrency investments, he was certainly a proponent of bringing cryptocurrencies under the regulatory gambit for the interests of investors.

In a public statement dated June 11, 2017, Jay Clayton mentioned that the primary concern for the SEC with regards to cryptocurrencies and ICOs were primarily around security and compliance.

Protecting the interests of investors along with ensuring that market professionals who manage such investments are compliant with the regulations of the financial markets.

As things stand currently, the SEC is yet to firm up the rules to govern digital tokens and the lack of regulatory oversight has driven bulk of investors away from Cryptocurrencies. Having said that, the future is certainly going towards cryptocurrencies being accepted in the mainstreams of investments and financial markets.

In another development, we have Coinbase, one of the largest cryptocurrency marketplaces planning its debut on the stock markets. Its yet to receive SEC approval.

The Future

In recent times, we have had a heightened level of activity around Blockchain & Crypto ETFs (Exchange Traded Funds) and it has caught on with several investors owing to operational convenience and greater profit margins.

However, as a financial asset, cryptocurrencies haven’t been able to instill confidence among majority of investors who typically invest in financial markets. We believe there are two primary reasons driving investors away from cryptocurrencies:

  • Security & Regulation
  • Understanding the fundamentals of Blockchain technology

While the security and the regulation is well chronicled. The big question that needs to be answered is, can we have regulation which protects investors as well as Blockchain project founders along with cryptocurrency marketplaces?

However the bigger deterrent of cryptocurrencies going mainstream is the education and insights around Blockchain and the ecosystem.

Cryptocurrencies and the technology behind them needs to be well understood by a common man for it to gain popularity in the mainstream and attract funds on a large-scale.

Source: WSJ, Coingecko, SEC, Cointelegraph, Business Insider

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About the author
Siddhartha Dasgupta

Contributing Author

Sid has been a content solutions evangelist and a digital marketer for 10+ years. Having written for brands such as IBM, Infosys and other technology corporations and startups, he is always at the cutting edge of researching & writing about emerging technologies.

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