As might be expected, Tuesday’s Senate hearing on cryptocurrency regulation touched on an oft-discussed facet of digital assets: their price volatility.
This has been a cause of quite a good amount of concern, particularly for those observing Bitcoin and other cryptocurrencies closely, whether for investment purposes or for regulation. That’s why it’s no surprise that this issue was raised at the recent Senate Banking Committee hearing on cryptocurrencies.
Securities and Exchange Commission chair Jay Clayton and Commodity Futures Trading Commission chair J. Christopher Giancarlo were present to expound on their thoughts regarding this matter. For Giancarlo, “Bitcoin’s volatility was not as large as other asset classes like [the] VIX. We have seen extreme volatility in bitcoin but in our world [commodities], we are used to volatility in asset classes.
Clayton, on the other hand, conceded that he has no idea as to what’s causing this unpredictability and seeming volatility of bitcoin and cryptocurrencies. However, “[Cryptocurrencies are] not correlated with sovereign currencies, so it must be something different than what would move the dollar. But that’s one of the issues before us – there does appear to be a lot of volatility compared to the medium they are supposed to be replacing.”
He also posited that the investors would have to play a huge role in letting derivative products like ETFs to actually be able to promote stability for the bitcoin’s price fluctuations. He also hinted at the agency possibly giving the green light for such a financial product, somewhere down the line in the future. “If we get comfortable… then we can move forward.”