Let’s get ready to RUMMMBBBLLLEE!!! If you were disappointed in the Mike Tyson-Jake Paul 8-round snooze-fest last month, there’s great news for you: there’s a title fight coming in late January 2025.
Fighting out of the red corner, longtime proponent of lighter-handed Crypto enforcement, and … President Elect Trump’s new SEC Chairman … Paul Atkins!
Fighting out of the blue corner, a departing SEC chairman but one who’s let loose some strong Crypto watchdogs behind him … Gary Gensler!
The election of Donald Trump in early November heralded many potential changes, but for those invested in alternative assets such as Bitcoin, Ethereum, Solana, XRP and other assorted “altcoins,” the big news was that longtime Crypto villain Gary Gensler, current head of the SEC, would likely be forced out as Trump pledged on the campaign trail to replace him. Trump promised a more Crypto friendly-regime and already we are seeing that bear out as Gensler elected to resign effective January 20th1, when the new administration begins and new SEC Chairman-to-be Paul Atkins takes over2.
They are fighting over your eggs, specifically your retirement eggs in the brand-new Cryptocurrency basket. The newer, incoming regime is more “free-range” and wants to let you know there are bad eggs out there and if they can identify them, then they’ll get rid of them promptly, but generally they want to go lighter on enforcement in the Crypto space. The old regime wants to identify the different conditions that can cause the bad eggs to get consumed by an unsuspecting public and wants to regulate and enforce penalties against those who would use the rotten eggs for rotten purposes. There’s no argument between the two groups that the young asset class of cryptocurrency needs some kind of regulation: it’s the degree of regulation and enforcement that’s at the center of the controversy.
The news of Trump’s election and Gensler’s resignation vaulted the price of Bitcoin straight over the precipice of the $100,000 valuation. Bitcoin has ascended to $103,224 as of this writing after rapid scaling upwards from the pre-election closing price on November 4th of $67,779.88. That’s a 52.3% gain in one month. So, it would be a touch of an understatement to say that sentiment has shifted to the bullish side over the last month.
But the fight for free-range Crypto from over-regulation is just beginning for Crypto advocates and holders of cryptocurrency. Gary was not alone. John Reed Stark, a leading, insightful Crypto-watchdog and former Chief of the SEC Office of Internet Enforcement, tweeted today that Gensler has been active in his last couple of months in office. He said Gensler has “just promoted three of the best, brightest, experienced and most dedicated crypto-enforcement lawyers in SEC ranks to senior executive positions – running the SEC’s Trial Unit and running the SEC’s Crypto Unit.” Stark says they “will not roll over easily3”.
This is where caution is advised. This battle for the future of the regulation of cryptocurrency is not over; it is only beginning. So before you empty your money-market account earmarked for next year’s vacation to invest in Crypto on an exchange or you learn how to keep coins in “cold storage” and begin hiding your private keys to your bitcoin wallet in your sock drawer, slow down and breathe. There’s plenty of money to be made that doesn’t involve throwing money at anything that’s run so far, so fast and has no cashflow whatsoever to mitigate downside risk as do companies listed on stock market exchanges.
It’s true that Bitcoin only has 21,000,000 coins and almost all have now been mined. It’s true that it’s shown explosive growth recently and a cloud of regulation may be lifting somewhat. But the concerns of the US Government for the use of cryptocurrency by terrorists, sex-traffickers and narco-dealers are not going away. There’s a real need and desire to put some guardrails on this racetrack. There have been many billions in over 100 crypto hacks of exchanges in the last decade and one prominent exchange, FTX that became insolvent and fraudulently carried out its business. There have been billions lost in “rug pulls4” where the developer of a currency abandons a project and “pump and dumps” where a developer hypes a currency and sells for massive profits leaving others with devastating losses.
There are a million and one ways to lose yourself trying to invest in this fledgling industry and relatively few “safe” places to invest in it. Choosing to steer clear of the risks of holding your coins on hackable exchanges by holding your coins in cold storage (a USB device for all intents and purposes) involves keeping up with the latest technology and storing your coins in a “safe place”. If you go that route, then there’s the ever-present threat of fire or flooding or theft that you’ll forever be worried over. There’s the particularly painful story of Stefan Thomas, a German-born San Francisco programmer who lost the piece of paper his password was on and now cannot access his 7,002 Bitcoins5 (worth $693,380,052 at today’s price). At the time the article was published, he only had 2 of 10 guesses left before the device he stored them on shuts off access to it forever. Imagine … life-changing wealth, if you could only remember that stupid password …
At The Wealth Training Academy, we are not ignoring the potential of Crypto. As fiduciaries we have chosen a safer path to invest by investing in publicly traded companies that benefit directly from the growth of crypto. If you’d like to know more, give us a call and we’ll sort your eggs into different baskets and use our carefully crafted recipes. After all, there’s more than one way to make an omelet, and we choose to make yours without putting your eggs in your sock drawer.
Sincerely,
The WTA Investment Committee
Sources:
1 https://www.salon.com/2024/11/21/sec-chair-gary-gensler-stepping-down/
2https://www.thestreet.com/crypto/policy/trump-picks-pro-crypto-paul-atkins-to-lead-sec-a-proven-leader-for-common-sense-regulations
3@JohnReedStark – 12/4/2024
4https://finbold.com/revealed-historys-10-biggest-crypto-rug-pulls/
5https://news.bitcoin.com/bitcoiner-loses-password-to-7002-bitcoins-worth-240-million
