Top regulator becomes unlikely hero for bitcoin activists

Top regulator becomes unlikely hero for bitcoin activists
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A top federal regulator has become an unlikely hero to the cryptocurrency community after making optimistic comments about bitcoin and other digital currencies.

The libertarian-leaning cryptocurrency community tends to be wary of attention from regulators. But Commodity Futures Trading Commission (CFTC) Chairman J. Christopher Giancarlo won over cryptocurrency advocates with his comments at a congressional hearing last week.

“It strikes me that we owe it to this new generation to respect their enthusiasm about virtual currencies with a thoughtful and balanced response, not a dismissive one,” Giancarlo told a panel of Senate Banking Committee members on Tuesday.

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“I think this distributed ledger technology has enormous potential. Now how it will be realized, when it will be realized, are challenges, and those we can’t say,” he added.  

Giancarlo’s openness to the technology earned him immediate praise on Twitter, where his number of followers grew sevenfold in the 24 hours after the hearing.

“Chairman Giancarlo ... welcome to crypto twitter,” tweeted Neeraj Agrawal, who handles communications for cryptocurrency advocacy group Coin Center. 

Other prominent cryptocurrency community members called Giancarlo the "goat” — an acronym for “greatest of all time” — and began tweeting the hashtag “#GiancarloForPresident.” 

One tweet by Coin Center quoting Giancarlo during the hearing garnered over 6,000 retweets and 11,000 likes.

Enthusiasm for the CFTC head grew from tweets praising him into memes depicting him as an ally of cryptocurrencies. 

One meme shows Giancarlo’s face superimposed on top of “The Lord of the Rings” character Legolas, offering his support to bitcoin as an unlikely ally. Another widely shared meme shows the CFTC head speaking during the meeting with superimposed text that reads “HODL!!!” — cryptocurrency community slang for holding cryptocurrency assets for the long term despite price drops or uncertainty. 

Giancarlo’s optimism comes at a difficult time for the cryptocurrency community, which has seen bitcoin drop from a high of over $19,000 late last year to less than $9,000. The regulator’s opinions on cryptocurrencies could prove critical to their future, with advocates closely watching what action regulators might take on the technology.

Cryptocurrencies are usually decentralized, making them difficult for governments to tightly regulate or ban. But governments have taken an increasing interest in cryptocurrencies as they become more integrated into the global financial structure, with some cryptocurrency advocates fearing the effect of increased regulation. 

Before Tuesday’s hearing, Giancarlo and Securities and Exchange Commission (SEC) Chairman Jay Clayton had not given much indication about any future plans to regulate cryptocurrencies, aside of some public remarks and an op-ed. 

The CFTC currently classifies cryptocurrency as a commodity, while the SEC has said that it will take action against scams in the space.

Giancarlo has welcomed the new attention from the cryptocurrency community. He took to Twitter to thank his new supporters.

“Coin fans - Thx 4 ur enormous response 2 my recent US Senate remarks.  Lol. As you invest remember: caution, balance & DYOR,” he said, using the community acronym for “do your own research,” advice popularly given as a warning in the cryptocurrency community to avoid buying blindly on hype.

The cryptocurrency community’s new appreciation of Giancarlo was unexpected. Some cryptocurrency advocates hope that increased government interest will bring new stability and legitimacy to the technology. But many more are wary of oversight from government regulators, who they fear will misunderstand cryptocurrencies or stifle development.

“I think the bitcoin community doesn’t always expect to hear favorable things from government. What they got from the hearing was a pretty measured and even hopefully response from government,” said Coin Center’s Agrawal, explaining the online enthusiasm for Giancarlo. 

The praise for Giancarlo is markedly different from the reaction to cryptocurrency comments from other public financial figures. 

Cryptocurrency circles on Twitter and Reddit often make negative memes about cryptocurrency skeptics like economist and New York Times columnist Paul Krugman and J.P. Morgan CEO Jamie Dimon. 

“There’s also a lot of ‘memeing’ people who support a coin you don’t like,” said Agrawal. “This seems to be the first instance of someone from outside the crypto community who has received an overwhelming support from the community.”