Cardano (CCC:ADA-USD) hit the headlines recently, but not so much as a potential successor to Ethereum (CCC:ETH-USD).
It also doesn’t attract attention thanks to its smart contract capabilities following Alonzo’s previous upgrade.
On the contrary, Cardano is making the news these days based on the opinions of its founder, Charles Hoskinson, regarding the regulation of cryptocurrencies.
Hoskinson hasn’t pushed for a minor overhaul of the current environment. Instead, he seems to be advocating for significant changes.
Hoskinson notes that cryptocurrency does not fit perfectly into the current pattern of regulators and asset types. It also implies that crypto should not be treated as a commodity or security, stating:
“It should be regulated according to its use. You need a different regulatory system and that doesn’t really fit well in the United States because generally what we do is create a regulator for one type of asset: the CFTC manages the materials. First, derivatives like the Securities Exchange Commission manages securities. “
This almost suggests that Hoskinson is arguing for the formation of a new dedicated cryptocurrency regulator.
This, however, will almost certainly not happen. The alternative, very likely, scenario is that the SEC will gain much greater oversight of the cryptocurrency in the future.
This is a negative thing for Cardano, and crypto in general.
Surveillance hurts, doesn’t help
Cryptocurrency regulation heralds either a new wave of growth or a slowdown depending on your perspective.
Yes, increased surveillance establishes a codified set of laws defining what is and is not allowed in the new world of challenge, blockchain, and cryptocurrency. This arguably gives more confidence and investment capital over time.
But, if like Hoskinson, you’re skeptical of the purported benefits, there’s a lot to suggest that’s just not true.
It draws a parallel between the Suspicious Activity Reports (SAR) that institutions currently rely on and SEC crypto regulation.
He notes that SARs are first identified almost exclusively by the institutions themselves rather than by the IRS.
“That means 99% of the time it’s not the IRS finding something on its own, or the SEC finding something” Hoskinson said. “It’s actually reported to them by a financial intermediary. “
So, the increased crypto oversight by the SEC means that regulators know nothing more about the cryptocurrency, they simply monitor it more. This SEC oversight drives prices down but does little to prove that the SEC provides a clearer framework.
It looks like a bigger font more than anything else. Fair enough, that’s what a commission does, but according to Hoskinson, the SEC’s intervention will not be positive.
Implications for ADA awards
Hoskinson’s comments have little correlation with ADA pricing in this case. There is probably little that investors and traders can take from his remarks that they can directly capitalize on from a price perspective.
But that at least suggests that Cardano’s management is carefully monitoring regulatory changes, drawing their own conclusions, and publishing them.
In other words, Hoskinson is trying to stand out and his company as thought leaders when it comes to regulatory actions governing the crypto landscape.
The Cardano team has a reputation for being a sort of assembly of great thinkers, even in the crypto space. They seem to play the long game in a space too often defined by flashy projects with much less substance.
This makes Cardano a less attractive investment in a sense. But it also means that Cardano is likely to take smart action given the looming future crypto landscape.
What to do with Cardano
I’m still a fan of Cardano and what they’re building. The company has entered the third of its five phases, Goguen, with the advent of smart contract capability.
There is probably little to suggest that the ADA is going up or down right now, but I would bet on this for the long term with great confidence.
As of the publication date, Alex Sirois does not have (directly or indirectly) any position in any of the titles mentioned in this article. The opinions expressed in this article are those of the author, submitted to InvestorPlace.com Publication guidelines.
Alex Sirois is an independent contributor to InvestorPlace whose personal equity investing style focuses on long-term, buy and hold stock selections that create wealth. Having worked in multiple industries, from ecommerce to translation to education and using his MBA from George Washington University, he brings a diverse set of skills through which he filters his writing.