Ripple News Update
When there’s blood in the water, sharks come swimming.
This thought crossed my mind as I looked at cryptocurrency prices on Thursday morning.
You see, regulators the world over are releasing their plans for crypto oversight. What strikes me as interesting is the timing of these announcements; it just so happens that crypto prices are in freefall.
The XRP to USD exchange rate, for instance, is down 5.4% in the last 24 hours.
Regulators likely consider this a prime opportunity for pushing tighter constraints into the industry. Until now, they were hamstrung by the soaring price of digital assets, which made investors reflexively opposed to government intervention.
Falling prices can fix that lack of introspection in a hurry.
Just this week, there were three announcements related to crypto regulation. Below are brief summaries of each and how they fit into broader trends:
- Governments are claiming blockchain for themselves. The incoming governor of the Taiwanese central bank issued a statement saying he will consider a blockchain-based currency for the state’s financial system. This comes on the heels of Venezuela’s “petro” token and signals that Turkey and Russia will also raise money via a national cryptocurrency. What drives me crazy about these announcements is that they run counter to the very notion of decentralization. Blockchain was supposed to dilute power, not help in its consolidation.
- The IMF wants to track digital assets using…blockchains? Christine Lagarde, the chairwoman of the IMF, is worried that cryptocurrencies increase the size and riskiness of black markets. Her solution is to connect regulators around the world through a private distributed ledger of their own; in essence, arming her underlings with the same financial weaponry they are seeking to regulate. (Source: “Addressing the Dark Side of the Crypto World,” IMF Blog, March 13, 2018.)
- CFTC continues to push for self-regulation. The friendliest trend in regulation comes courtesy of the good folks at the Commodity Futures Trading Commission (CFTC). The agency is lending support to a self-regulatory organization (SRO) launched by the Winklevoss twins, thus adding weight to a pro-SRO speech made by Commissioner Brian Quintenz last week. (The Winklevoss twins became famous by claiming to have founded Facebook, Inc. (NASDAQ:FB) with Mark Zuckerberg. They settled with Zuckerberg out of court, then went on to become early Bitcoin millionaires.) (Source: “Statement of CFTC Commissioner Brian Quintenz on a Proposal by Cameron and Tyler Winklevoss for a Virtual Commodity SRO,” CFTC, March 13, 2018.)
Our examination of ongoing regulatory efforts suggests that oversight will have a net positive impact on XRP prices. This may seem counterintuitive, but take a closer look at the chaos in cryptocurrency markets and tell me we don’t need tighter rules. It is out of control.
Once these rules become clearer, I expect market uncertainty to evaporate and (at least part of) the industry to resume its upward trek to higher prices. As such, we maintain our $10.00 Ripple price prediction, even if that price target seems controversial at the moment.