Massachusetts Secretary of the Commonwealth William Galvin didn’t mince words in discussing his displeasure with Bitcoin on Wednesday. While he stopped short of calling the cryptocurrency a fraud, what he did say could prompt one to think they were listening to Jamie Dimon.
It should also put Bitcoin traders on further notice about the increasing number of government officials that are watching the crypto, and are looking for ways to regulate it.
Galvin appeared on CNBC late Wednesday and laid into Bitcoin with a vengeance. Despite the cryptocurrency’s rapid climb this year, and it being able to attract the likes of the Cboe and the CME, Galvin is unimpressed.
“[Bitcoin] doesn’t pass the smell test. There’s no product here; this is entirely speculative. That’s already been proven by its wild gyrations in value.”
Wild ride equals bubble?
Indeed, Bitcoin has taken traders on a wild ride over the past few weeks. It’s been as high as almost $20,000, and as low as almost $10,000 over the span of a week.
Galvin doesn’t like such swings at all. He said he believes Bitcoin should be avoided by people who don’t understand the digital asset and the high likelihood that they can lose their money.
“It’s subject to manipulation because no one can explain it; no one can control it; no one can explain exactly where and when and from whence profits are going or coming. It is clearly a bubble. There’s no question about that.”
Plenty would beg to differ about Bitcoin being a bubble. That includes Wall Street strategist Tom Lee. We recently told you about how he rationalized Bitcoin not being a bubble by saying that anyone who says Bitcoin is a bubble hasn’t done their work.
“…if they say it’s a bubble, it’s the smallest, least held bubble I’ve ever met. I know very few institutions that own Bitcoin, so how can something be deemed a bubble that’s only held by a few?”
Government officials holding the cards
No matter the opinions of those who try to vouch for Bitcoin, Galvin seems to have his mind made up. His statements, rational or not, could shape how his state handles cryptocurrencies.
He said that among the crypto-related issues Massachusetts has on the radar screen are initial coin offerings. ICOs have increasingly come under fire because of the unscrupulous players peddling worthless coins to line their own financial coffers.
Galvin also takes issue with companies that alter their names to incorporate some aspect of the red hot cryptocurrency space. Take for example a company originally called Long Island Iced Tea. The beverage maker last week changed its name to Long Island Blockchain, although its business doesn’t appear to incorporate any aspect of the technology that underpins Bitcoin.
Worth noting is that no U.S. regulatory body has given a stamp of approval to any of these offerings, and that includes the almighty Securities and Exchange Commission.
“We’re concerned about companies that adopt the lingo of Bitcoin and other cryptocurrencies to try to enhance their value of stock that have nothing to do with it,” Galvin said.
Then there is the matter of bundling investments to incorporate Bitcoin. Galvin doesn’t like that either, and said the practice was also among the areas his office is watching closely.
Whipped into a frenzy?
Galvin likened the atmosphere surrounding Bitcoin as mania, and stressed that by speaking out about the risks of Bitcoin, he is trying to protect investors.
The average investor gets sucked in by the mania about these things believing they are losing out on something, he said. The result is that they can end up losing their money, he added.
“[The mania] is being fed by the frenzy that people believe they will make money by simply investing in this. This is ripe for the potential for fraud, and we’re very concerned about that.”
While many can see Galvin’s concerns as justifiable, just as many see how with each day Bitcoin’s price goes up, the temptation to “get in” is too great for many.
Caution and wild ride be damned is the thought, with some not wanting to be left behind and miss out on the financial gains Bitcoins stands to afford them.