17 Juli 2019

Daily Market Commentary – A View on the Libra Hearing

Patrick Heusser

Patrick Heusser

Senior Trader bei Crypto Broker AG

Über den Autor

In this daily market commentary, I would like to express my personal view on the LIBRA hearing.

I believe that the average person on the street, and retail crypto traders, are not accustomed to listening to these type of hearings, and therefore make connections to financial markets and asset price actions.

Most of the tweets I saw during or just after the hearing were bullish on bitcoin, but there was no real reason behind it. I tried to engage with some of the guys (e.g. Anthony Pompliano), but I did not receive any responses.

I listened very carefully to the hearing and my take is not that bullish. Rather, my initial fears were confirmed by the repetitious statements of almost every senator.

Sanctions List / KYC&AML / Privacy / Profit Insensitive

The Senate was very clear on these points. If LIBRA and CALIBRA are not able to fulfil them, we will never ever see an approval. This is not per se bearish for bitcoin, but when you have been in the financial industry long enough and listened to many of these types of hearings, you know that every politician has a hidden agenda.

My belief is that US politicians will use LIBRA as a „test-case“ to lay down the groundwork for their legislation on cryptocurrencies and any other form of digital money. And the way I see it, if digital assets do not fulfil the above main points, they will be labelled as illegal.

Additionally, they are looking very closely at the service providers who are part of the whole game. By service providers, I mean the companies that are providing the ramps and bridges between digital assets and fiat. Because if they cannot control it in the way they want to control LIBRA, they will constrain it by controlling and setting up regulations for those service providers.

This leads me to the conclusion that in the short to medium term, bitcoin will have a tough time going up in price as most of the institutionals will be cautious until some of the smoke from the LIBRA hearing has cleared. Looking a bit further out, if service providers in the financial industry are willing to integrate bitcoin into their infrastructure and are able to comply with the rules and regulations dictated by the main regulators around the world, it has a chance of becoming a new asset class. And, subsequently, the price will go up since it is still one of the best assets to store value.

Here is the link to the video of the hearing (full length: 2 hours):