Markets and bitcoin take breather from mania
Bitcoin’s parabolic gains are attracting more regulatory scrutiny to cryptocurrencies -- which the co-founder of a mining company says is positive for digital coins.
Peter Wall, whose Argo Blockchain Plc is up 1,400 per cent in the past year, said he sees Bitcoin “moving in one direction” as interest in the sector increases and institutional investors come on board. That’s naturally going to come with more regulatory attention, he said.
“Like any sector, there will be a dance with regulators, a push-and-pull,” Wall said in an interview on Bloomberg TV. “We think some guardrails are good.”
The regulatory environment for cryptocurrencies is largely still in its infancy, but many analysts say that rules will develop as the industry becomes more mainstream. The U.K. financial watchdog recently banned the sale of crypto-derivatives to retail investors and warned buyers risk losing all their money.
In the U.S., many investment firms have applied to create crypto-tracking ETFs, but have been denied by the Securities and Exchange Commission. Last month, VanEck Associates Corp. started a new push to launch an ETF tracking Bitcoin.
With so many investors wanting ways to trade crypto and few financial products available, shares of crypto-mining companies are booming.
In the span of a month, Argo has gone from being a company with a market value of about 25 million pounds (US$34 million) to more than 300 million pounds. The firm, which ‘mines’ cryptocurrencies by using high-powered computers to solve complex problems, operates data centers in North America, including a 40,000 square foot facility in northern Quebec.
Bitcoin prices have more than doubled since the start of November, reaching nearly US$42,000 on Jan. 8.
Bitcoin bulls argue that this rally will end differently from 2017, when the digital coin tumbled, because the players then were mostly retail investors. More institutions and notable investors, from Paul Tudor Jones to Scott Minerd and Stan Druckenmiller, have either started allocating funds to Bitcoin or have said they’re open to doing so.
Wall said plans by central banks to introduce their own versions of digital currencies will also probably benefit the sector rather than hinder it.
It will “spur more innovations in this space, not only for countries but for cryptocurrencies in general,” he said. But “they will be different because they will be centralized. They will be only authorized by the government whereas something like Bitcoin is by its very nature decentralized. It’s worldwide.”