For cryptocurrency enthusiasts, 2018 has been a rough year. On any number of fronts, things appear to be heading in the wrong direction. But last month’s confirmation of new SEC commissioner (and apparent crypto fan), Elad Roisman, could change that momentum.
Let’s start with the bad news. The price of Bitcoin, which topped $17,000 in January, now hovers around $6,500. Meanwhile, the perception of cryptocurrencies as a risky business has only been hardened by recent events. The Japanese cryptocurrency exchange Zaif, which boasted that it would be “practically impossible” to hack, suffered – you guessed it – a hack. (Zaif says it will make customers whole for the $60 million in lost coins, but still.) Meanwhile, The Wall Street Journal just produced a damning report on the ways in which cryptocurrency services, including one U.S.-based exchange in particular, have been facilitating money laundering. And in Washington, the SEC keeps rebuffing the crypto community’s attempt to create a bitcoin ETF.
The negative momentum in each of these areas – market price, security, and policymaking – tends to reinforce negative momentum in the others. The lack of security that cryptocurrencies enjoy, for instance, tends to depress both their market price and chances of being embraced by the SEC.
Those hoping to reverse the negative spiral may be cheered by last month’s confirmation of Elad Roisman as an SEC commissioner (the fourth appointed by the current president). Roisman is perceived as a crypto-friendly commissioner, who in July made a call for the SEC to “re-examine its rules” as they apply to new technologies like “initial coin offerings and blockchain.” That’s a broad statement, but some have read it to suggest that Roisman would vote in favor of the long-awaited bitcoin ETF.
His vote alone would not be enough. When the SEC turned back applications for nine bitcoin-linked ETFs in August, Republican commissioner Hester Pierce was the lone dissenter. Pierce made the argument that blessing a bitcoin ETF would draw institutional investment and “ameliorate many of the Commission’s concerns with the bitcoin market.” She and Roisman would have to bring one more.
In late September, the SEC announced that it was beginning proceedings to determine whether to approach a bitcoin ETF proposed by the money manager VanEck, which many believe has the best chance of any yet to be considered. The decision will be an early indication of the extent to which Roisman will provide positive momentum for cryptocurrency fans.