What Will It Take to See Crypto at $1 Trillion?

It’s fair to say 2017 was ‘the awakening’.

It was the year the world took notice of crypto. A wave of new people — ‘noobs’ — entered into the crypto world.

Part of this was bitcoin running from around US$1,000 to almost US$20,000.

You should look at the ‘market cap’ chart of all crypto. You can see in January 2017 crypto total ‘market cap’ was around US$17 billion.

By January 2018 the ‘market cap’ increased to US$830 billion.

Thanks to this, the mainstream media jumped on. CNBC even started their own Crypto Trader program. It was fascinating…albeit a little comical.

Overnight there was an influx of so-called ‘crypto experts’.


Illegal gain — that’s technically not illegal, yet

There were YouTube stars shooting off advice to thousands of noobs. They would pump or ‘shill’ a crypto. Then they would rip out profits on the way up. They were effectively front running the crypto.

That means they would have a huge ‘bag’ of a particular crypto. They would then pump it to all their followers to buy, buy, buy. As the price started to soar they would cash out picking up the profit.

This evolved into ‘pump groups’. These would openly coordinate to pump a crypto. And again the real winners were those at the centre of it all. The true scammers and fraudsters were the ones reaping profits.

It was and still remains very profitable. But it’s unethical and unprofessional. In traditional markets, it’s illegal. Sadly those who get caught up in their web end up losing out.

And that’s not an uncommon situation when it comes to the crypto space. 

When you get the kind of mania that we saw in 2017 you get ‘chancers’.

These people see an unregulated opportunity to do anything they like.

That includes lying to people, spreading misinformation, manipulation and misleading conduct. If this kind of behaviour were repeated in stock markets, we’d see a lot of people convicted of securities fraud.

But this is really not all that different to the early days of stock trading. People forget — or they simply weren’t alive — when the first stock markets came to life.

However, in the early days there was fraud, deceit and theft. Market trading was for the elite. The already wealthy would use these investments to get wealthier.

And there were plenty of fraudsters selling worthless securities. For this reason authorities decided to get involved. And in the early parts of the 20th Century ‘Blue Sky Laws’ were put in place.

The aim was to prevent investors against securities fraud. It required registration of securities. It required a level of transparency and professionalism. It required disclosure and fair practices.

Crypto today is also in its early days of existence. And right now it’s ‘pre-regulation’. The world is still trying to figure out just how to deal with it.

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Malta to become Blockchain Island

However some countries are figuring it out faster than others.

The mainstream media focuses on the US for guidance on crypto. The SEC is seen as the authority on how to treat crypto regulation.

There’s one big problem though. They’re trying to apply old laws to new technology. They’re trying to figure out how to treat crypto, as if it was a security.

And because they couldn’t be bothered actually trying they’re attempting to define crypto as existing financial instruments.

That doesn’t work. It’s an octagonal peg in a triangular hole.

However Malta has decided to take a far more proactive approach. In fact their aim is to become a true ‘Blockchain Island’.

They’re doing this by creating new laws around blockchain technology. Three bills are now law that govern this area. According to a Maltese-based law firm the laws are:

  1. The MDIA Bill — the bill shall provide for the creation of the Malta Digital Innovation Authority (‘MDIA’), the Authority which shall be responsible for the certification of technology arrangements and the registration of Technology Service Providers. 
  2. The ITAS Bill — this bill shall set out the regime for the registration of Technology Service Providers and the certification of Technology Arrangements.
  3. The VFA Bill (The Virtual Financial Assets Bill) will be used as the framework necessary for ICOs, cryptocurrency exchanges and the regulatory regime for services relating to virtual currencies. Under this bill, brokers, exchanges, assets managers, investment advisors, wallet providers and other market makers within the virtual currency field will be regulated. An important feature of this bill is that it distinguishes between a DLT Asset and a Virtual Financial Asset, introducing the Financial Instruments Test that will be used to determine, under which category the asset in question will be recognised. This will control which platforms the asset would be able to be exchanged within.

These set up an attractive framework for existing crypto projects and prospective ones. We already know that two of the world’s biggest crypto exchanges are moving to Malta.

Both Binance and OKex are packing up shop and setting down in Malta. The reasons are simply because of its open approach to digital innovation.

Last week in Amsterdam we visited the Blockchain Expo Europe. We had the chance to hear Dr Abdalla Kablan speak about Malta as a location for digital innovation.

Kablan is the Chairman of the Maltese Blockchain Committee. They consult directly to the Maltese government. And it seems the Maltese government has been listening.

What it points to is inter-country competition. That’s exactly what we’ve been predicting will happen in this space.

Our view has been big countries — like the US — will take a reactive approach to crypto. Thus far, we’re 100% correct in that view. We also anticipate that small countries that are flexible will be proactive with the crypto opportunity.

We believe they see this as an opportunity to grow GDP, bring in jobs and build a stronger economy. And that’s exactly what’s happening.

Malta appears to be setting the scene for the rest of the world. One small country in the Mediterranean. A population of just 436,947. This is the pioneer country that could see crypto really hit mass adoption.

And if other countries follow the ‘Malta Model’ we might very well see crypto markets back at US$830 billion. In fact if it all works out as we predict, we think we’ll see it soar well past US$1 trillion.

Malta. That’s what might take crypto markets to US$1 trillion. Bet you didn’t see that coming?



Sam Volkering,
Editor, Secret Crypto Network

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Sam Volkering is an Editor for Money Morning and is small-cap, cryptocurrency and technology expert.

He’s not interested in boring blue chip stocks. He’s after explosive investments; companies whose shares trade for cents on the dollar, cryptocurrencies that can deliver life-changing returns. He looks for the ‘edge of the bell curve’ opportunities that are often shunned by those in the financial services industry.

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