Beautiful misunderstanding! Bitcoin breaking through $10,000 has nothing to do with regulation. One chart will help you understand the reason behind the surge!

Bitcoin's recent trend has been very boring. It has been trading sideways between $9,200 and $9,600 for nearly two months without any major fluctuations. People in the industry have jokingly said that "if Bitcoin continues to remain unchanged, it will soon become a stablecoin ."

Suddenly on July 26, the price of Bitcoin broke through $10,000 after passing several levels, and has now reached $11,000, the first time since June 1. The cumulative increase has exceeded 20%, attracting attention from all walks of life.

1. Bitcoin’s “ID card”?

Many people attribute this price breakthrough of Bitcoin to the recent ruling of the U.S. federal court on Bitcoin, which defined Bit as "currency" and believed that Bitcoin had obtained an officially recognized legal "identity card", thus the price of the currency soared.

This is a beautiful misunderstanding.

According to Bloomberg, on July 25, Washington, DC Chief Judge Beryl A. Howell said that the virtual currency Bitcoin is a "currency" covered by Washington, DC's Money Transmitter Act.

The judge said this in the context of criminal charges against Larry Dean Harmon, an illegal Bitcoin platform trader, for operating remittances without a license and laundering money. According to the regional laws of Washington, DC, any remittance business needs to apply for a remittance license. The defendant tried to defend himself by saying that "Bitcoin is not a currency, and the platform he operates is not a remittance business as defined by the United States Code." The judge finally rejected the defendant's defense, which led to the above statement that Bitcoin is a currency.

Will the fact that a judge in the District of Columbia has recognized Bitcoin as a currency have a big enough impact to push the long-trailing Bitcoin price to $10,000? In fact, the judge's ruling has no substantive impact, because it is not new for Bitcoin to be recognized as a currency by state law. In fact, Bitcoin is recognized as a currency by state law in most states across the United States.

Mr. Cai from ChainHoulang once served as the head of a US company of a digital currency exchange. When expanding his US business, he applied for business licenses in one state after another, which is the "Money Transimittting License" (MTL) mentioned above.

This is not only the case in the states, but also in a special agency at the federal level in the United States, which considers Bitcoin to be a currency. FinCen, the Financial Crime Prevention and Anti-Money Laundering Office under the U.S. Treasury Department, believes that digital currency is closer to currency, and therefore stipulates that all institutions involved in digital currency in the United States must register as Money Service Business (MSB) on FinCen and set up corresponding compliance departments internally.

The Washington, D.C. judge merely reaffirmed that Bitcoin is a currency under state law. This is a well-known fact among digital currency traders in the United States, so the overseas media reported it calmly, while domestic businesses rushed to spread the news and celebrated, which was ridiculous.

2. The key is not the judge but the Federal Reserve!

Of course, the U.S. regulatory system for digital currency is very complicated, which is also an important reason for this beautiful misunderstanding.

Most states, like Washington, D.C., treat Bitcoin as a currency and require a remittance license to operate such a business. New York has gone a step further and established a special license for digital currencies called BitLisence. Some states also prohibit Bitcoin transactions.

At the federal level, the Federal Reserve has the most say in the definition of digital currency, but it has tried its best to pass the buck, stating that digital currency is not real currency and that the Federal Reserve has no legally authorized responsibility and obligation to directly regulate it. The Securities and Exchange Commission (SEC) has identified all tokens except Bitcoin as securities, the Futures Trading Commission (CFTC) has identified Bitcoin as a commodity, and the Internal Revenue Service (IRS) believes that digital currency is an asset that needs to be reported for tax. There is also the OCC Office of Currency Comptroller, the CFPB Consumer Protection Bureau, and the FinCen mentioned above, which have different definitions of digital currency based on their different functions.

The United States has not yet formed a unified system for digital currency regulation, and various departments overlap. For a detailed review, please refer to the article "Digital Currency in the Eyes of Economists Series 6: Keeping Pace with the Times (Regulatory Edition)" written by Mr. Cai on the chain.

In short, unless the Federal Reserve declares Bitcoin to be a currency, no one’s words will be of much use . In addition to interpreting existing laws, judges cannot exceed their judicial authority and change the characterization of Bitcoin on behalf of administrative regulatory departments and legislative departments.

3. The compensatory rise

Bitcoin broke through $10,000 not because of a judge's words, so what was the reason behind it? A picture is worth a thousand words, and this picture explains the reason for the sharp rise of Bitcoin.

In the past two months, gold has been soaring, breaking through historical highs repeatedly, reaching a high of $1,948 per ounce, just one step away from the $2,000 mark. The reason is that the global COVID-19 pandemic has hit the global economy hard, triggering global currency expansion, while the international political situation has become increasingly tense, and the deteriorating Sino-US relations are worrying. These major and far-reaching political, economic and social impacts have made investors deeply uneasy, and they have flocked to gold, known as a safe haven, in anxiety, pushing up the price of gold step by step.

As digital gold, Bitcoin is also one of the safe-haven assets. It should have the same upward momentum as gold, but it is unusually quiet. Until recently, the price of Ethereum broke through first due to the hot Defi market, and Bitcoin followed suit and rose sharply.

It can be said that this surge in Bitcoin was more of a compensatory rally driven by gold and Ethereum, and had nothing to do with the US judge’s speech on Bitcoin .

Bitcoin has been sideways for too long, and it is understandable that holders are anxious, but don't get too excited. As for the future market, everyone should stay calm and wait and see.

Link to this article: https://www.8btc.com/article/628203
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