Cryptocurrency Is Legitimizing!
Written by John Butler
Posted February 8, 2019
One thing cryptocurrency has left to do in society is become as valid in our financial systems as traditional currencies. It’s starting to happen now, with countries all over the globe implementing regulations to accommodate it.
Becoming 100% legitimate in the world’s eyes will prove crucial to crypto’s prosperous future. With legitimacy, the average Joe will begin to trust the industry, which is important.
When crypto gains enough trust, people will become more receptive to exploring it. They’ll see what it can do and recognize its untapped capabilities.
And what’s most alluring is that the smart ones will start investing in crypto.
But nobody wants something dangerous and mistrustful as an investment, and that’s exactly what many prospective investors I've spoken to believe: They liken crypto to dealing in the deep, dark web. They don’t think they have any business involving themselves in something like cryptocurrency.
Well, if their business is to make money, then yes, they should have business with cryptocurrency.
Once the crippling misconceptions are cleared across the board, I think we’ll enter a time when cryptocurrency and blockchain can really take off in every direction.
I forecast that this day is fast approaching, as some recent developments are chipping away at crypto’s dark connotation and steering it into the light of financial legitimacy...
Today, I’ll be filling you in on how crypto’s financial legitimacy has shot up in the past few weeks and what these new developments mean for us crypto investors.
Spoiler alert: It’s great news for us.
Hey, it’s Legal Money Now
One of crypto’s big leads into financial legitimacy involves U.S. courts. As of late, there have been a few court rulings that have given cryptocurrencies a helping hand.
On February 1st, a court in eastern Michigan took an interesting position on Bitcoin. Using the Treasury’s Financial Crimes Enforcement Network (FinCEN) and past district court rulings, the United States District Court for the Eastern District of Michigan took a clear position on Bitcoin.
Bitcoin is legal money.
Using the FinCEN’s standards, the court of Michigan considers cryptocurrencies money, not securities or commodities.
This ruling came about because a gentleman named Bradley A. Stetkiw was in federal court for money laundering. He never registered as a money transmitter and was using “hundreds of thousands of dollars of bitcoins” in tandem with his criminal activity.
Stetkiw argued that since Bitcoin wasn’t “money” under the 18 U.S.C. § 1960 federal statute and BTC “does not issue from or enjoy the protection of any sovereign government,” he didn’t need to register as a transmitter.
Well, the courts disagreed. They shot down his argument and declared BTC federally recognized money.
A Senate body in the U.S. has also contributed to crypto’s financial legitimacy lately.
On January 18th, a bill involving cryptocurrencies was introduced in the Wyoming Senate.
Here is a takeaway of what the bill requested:
Accept cryptocurrency on the same terms as fiat money.
Set clear classifications on crypto assets into three categories (virtual currencies, digital consumer assets, and digital securities).
View crypto assets as legal property and give banks permission to manage them in trust funds.
The bill was passed on February 2nd and is expected to go into effect on March 1st.
This development is especially exciting for Wyoming Senator Ogden Driskill, as he aims to make the Equality State the next “Silicon Valley of Blockchain and Cryptocurrency of the nation and arguably—the world.”
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Nasdaq Is Helping
Aside from the courts, the crypto industry has an unlikely support system in its journey to attain financial legitimacy: the Nasdaq!
Adena Friedman, Nasdaq’s CEO, thinks the crypto market “deserves an opportunity to find a sustainable future in our economy.”
A big problem with crypto is that hackers can do a bunch of malicious stuff. In particular, trading volumes and even market caps can be manipulated. That’s not good for investors who want reliable data on their investments.
Again, this plays into why the average Joe is scared of dealing with crypto.
Here’s how the Nasdaq is helping crypto, strengthening the latter’s financial credibility in the process...
Nasdaq is going to allow crypto exchanges to use its surveillance technology to ensure they’re reporting tamper-free figures. That would ease investors’ minds, as they’d no longer need to worry that the data they’re reviewing is fraudulent.
But first, any crypto exchange must be approved before it can use Nasdaq’s tech. To that end, Nasdaq employed about 20 people to process due diligent reviews of the exchanges. These exchanges are being investigated to ensure they’re meeting security and reporting standards.
Tony Sio, Nasdaq’s Head of Exchange and Regulator Surveillance, believes this vetting process is necessary.
Historically, we don’t do such a large vetting process for our clients because they are much more well-known. But as we started working with less well-known names, startups, then we realized we needed to do this check process.
Basically, the Nasdaq began working with smaller, lesser-known crypto exchanges and needed to make sure they were properly vetted.
The check process Nasdaq conducts includes three different parts:
The first, Business Model, reviews the reputation of the tokens available on the exchange.
The second, Exchange Governance and Controls, looks at the token listings and determines how clear they are on the crypto exchange.
The third, KYC/AML, involves making sure the crypto exchanges are following the Nasdaq’s KYC procedures. It will only work with exchanges that follow Nasdaq’s protocol.
If the crypto exchange in question passes each part of the check process, then it would be granted permission to use Nasdaq’s technology.
Out of the seven exchanges said to be cleared by Nasdaq, only two have been revealed: SBI Virtual Currency and Gemini.
All of this spells great news for us as investors. Let me tell you why.
Cryptocurrencies are becoming legitimized in the eyes of the federal government, which is at least reaching the consensus that cryptos are real money.
That will affect us positively through future legislation that understands, accommodates, and innovates the crypto market. It’ll potentially assist in reviewing crypto-related crimes, putting policies in place that support the investor and fight back against scams.
Other players in the economy could see all this and feel more comfortable about exploring crypto. Hell, someone like Big Insurance may want to get a piece of the crypto cake and offer stuff like digital wallet insurance.
The Nasdaq’s contribution really helped cryptocurrencies earn their legitimacy. Crypto exchanges applying for Nasdaq’s technology and being approved to use it tells us that there are reputable exchanges out there where our investments are safe and wanted.
That’s good. That’s great, actually. It shows crypto is getting out of that dark, mistrustful shadow. All these developments have pointed to that, certainly.
Overall, between the U.S. courts and the Nasdaq’s efforts, it appears the crypto market is leaving the niche filled with the tech-savvy and moving to a larger space where the average Joe gets to join the party.
That’s all I have for today, and I’ll sign off while introducing cryptocurrency to someone special...
Hey crypto, meet legitimacy. The world’s been waiting years for you guys to link up. We’re looking forward to you two swelling our digital wallets in the days ahead.
John Butler, Jr.
John Butler is Token Authority’s contributing editor. He first learned of Bitcoin in 2010 when it was still unknown. Since then, he has seen cryptocurrency and blockchain technology swell in popularity across the globe, making innovators and investors plenty rich. Every week, he brings Token Authority readers compelling information for crypto investing.
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