Fundstrat’s Tom Lee, a vanguard crypto analyst on Wall Street, is hailing Securities and Exchange Commission (SEC) official William Hinman’s new remarks on ether (ETH) as indicating that “65% of the current crypto market cap” is comprised of commodities in the U.S. — a legally significant designation that seemingly paves the way to easier institutional and mainstream adoption in America of the top SEC-greenlighted cryptocurrencies.
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Lee: ‘Roadmap … Becoming Clearer’
The “unregistered securities offerings” question has been a cloud over the cryptocurrency space in recent months. Projects like Ethereum, its “fuel” ether being the second largest crypto by market cap, seemed to be hanging in the balance, with its inaugural offering possibly fitting the bill of a security per U.S. law while its current decentralized ecosystem seemingly does not. What would the SEC decide?
Well, new clarity provided by top SEC crypto official William Hinman at June 14th’s “Yahoo Finance presents All Markets Summit: Crypto” suggested that the SEC’s leadership did not view ether in its current state as a security, while the possibility was left open that its initial offering was. Even with such nuance, it’s a major bit of clarity that brings the cryptoeconomy into further regulatory focus in the United States. Ether, bitcoin, and their like, then, are apparently commodities here and not securities — the latter instrument requiring significant wealth and Accredited Investor status in the U.S. per reigning domestic financial law.
Hinman’s now provided enough clarity, Fundstrat’s Tom Lee thinks, that institutional investors will see the top cryptocurrencies as a “clearer” investment option. The problem before, of course, was that firms would’ve been hesitant to invest in products that may have been deemed as unregistered security offerings at a future date. That problem is apparently no more for the top crypto projects, per Lee, who sees that reality as paving the way for a newfound pathway for institutional crypto investment in America:
CRYPTO: With SEC clarity yesterday on #ETH, 65% of the current crypto market cap is a “commodity” ($BTC $ETH $BCH $LTC). Seems like the roadmap for institutions to invest in crypto is becoming clearer…
— Thomas Lee (@fundstrat) June 15, 2018
The cryptocurrencies Lee mentions — bitcoin, ether, bitcoin cash, and litecoin — collectively account for a market capitalization of approximately $183 billion USD. At press time, the entire cryptoeconomy is hovering right around $283 billion. It stands to reason that Ethereum Classic’s ETC fits the bill as a commodity per Hinman’s new comments, too, so its market cap is another $1.4 billion to add into the mix. All in all, then, the grand takeaway from Lee’s highlighted perspective is that the assets that represent well over half of the cryptoeconomy’s market cap are now fair game, legally speaking, for American institutional and retail buyers.
Institutional Herd A’Coming?
Sentiment is the liquor of crypto markets, and we saw that yesterday as the ether price acutely surged around $60 after Hinman’s comments first broke. With the securities question seemingly settled for the second largest crypto, traders poured into ETH — a dynamic that’s a microcosm for the long-term institutional action that Tom Lee is seemingly portending for bitcoin, bitcoin cash, litecoin, ethereum, and these projects’ decentralized ilk.
But beyond sentiment and regulatory clarity, other factors are lining up in such a way as to indicate that such action is a train a’ coming. Business factors, primarily.
For example, just a few weeks ago news broke that Goldman Sachs is launching Wall Street’s first bitcoin trading desk — a shot across the bow of both Wall Street and the cryptoverse alike.
Popular American exchange Coinbase has also recently launched an “institutional suite” that caters to all the needs that big-wig investors, whether firms or individuals, could possibly have when it comes to investing in the top crypto projects. Moreover, Coinbase just announced support in its wider ecosystem for Ethereum Classic (ETC), another signal that their lawyers are confident that ETC is not an unregistered securities offering.
Investments in blockchain and crypto are seemingly going to keep coming then, with no slowdown in sight — regardless of the cryptoeconomy’s acute chop. “The institutionalization of this space is coming,” Mike Novogratz predicted at the end of last year. “It’s coming quick.”
His prediction seems rather unavoidable at this point, accordingly.
What’s your take? Is Hinman’s new comments a game-changer for the space? Sound off in the comments below.
Images via CNBC, WSJ, Pixabay
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