Ethereum News Update
The intricate web of U.S. cryptocurrency regulations is choking off innovation, says a new report from the U.S. Government Accountability Office (GAO).
The GAO report describes a fintech industry whose participants are stumbling around in the dark. No one quite knows which laws apply or when. So it becomes impossible to plan ahead with that much regulatory uncertainty. (Source: “Additional Steps by Regulators Could Better Protect Consumers and Aid Regulatory Oversight,” GAO, March 22, 2018.)
As a result, some firms delay launching in the U.S., while others abandon the idea entirely.
The GAO summarized the problem like this:
“The complex U.S. financial regulatory structure can complicate fintech firms’ ability to identify the laws with which they must comply and clarify the regulatory status of their activities.”
If you’re wondering why the GAO is criticizing other government agencies, it’s because their mandate is to hold the government accountable. The GAO is a watchdog. Naturally, this makes the agency pretty unpopular in Washington D.C., a city built on runaway power, but its objectivity is helpful to us right now.
It reveals something important about ETH prices. Namely, that excessive regulation is strangling the Ethereum to USD exchange rate, causing it to fall more than 65% from its peak.
However, it’s important to remember that despite this dramatic crash, Ethereum is still trading above where it was one year ago. Viewed from that lens, the recent crash looks more like a temporary correction in the face of uncertainty.
Once that tension washes away, we may witness a powerful recovery.
Valuing an asset with this much political risk is always a challenge. There’s simply no telling what is happening inside a regulator’s mind. That said, we can look to their public statements.
And based on our readings of the SEC and CFTC statements issued this year, we believe that fears of an autocratic crackdown on cryptocurrencies is overblown. It’s much more likely that the smoke will clear in a few months and investors will be relieved at the lack of damage.
With this in mind, we will leave our $1,500 Ethereum price forecast for Q2 unchanged.