Bitcoin Surges 20%, Triggered by Yellen and Trump's Remarks… September Regulation Turning Point to Watch

Bitcoin, after fluctuating in the $60,000 range for several months, recently surged by nearly 20%, drawing significant market attention. This sharp increase is not due to a single factor but rather a complex interplay of several major events occurring almost simultaneously. Treasury Secretary Janet Yellen's mention of increased Treasury buybacks, the U.S. Securities and Exchange Commission (SEC)'s 'Regulation Crypto' announcement, and former President Donald Trump's remarks on Bitcoin as a strategic asset all converged to significantly impact the market.

This rise in Bitcoin also led to a concurrent increase in major altcoins, including Ethereum and XRP. Unlike in the past, a combination of policy and political statements has been released simultaneously, acting as a positive signal for the entire virtual asset market.

The major events that drove the recent Bitcoin surge occurred intensively around August 19. At 4 AM KST on August 19, the SEC announced 'Regulation Crypto,' introducing new guidelines for virtual asset regulation.

Later that night, Treasury Secretary Janet Yellen mentioned an increase in Treasury buybacks, raising expectations for liquidity injection into the market. Immediately after this statement, Bitcoin showed a sharp upward trend. Furthermore, a few hours later, a meeting took place at the White House, where former President Donald Trump mentioned Bitcoin as a strategic reserve asset, further intensifying market interest.

The 'Regulation Crypto' announced by the SEC presented a new turning point in virtual asset regulation. This regulation allows the SEC to directly create rules for virtual assets without additional legal amendments like the Clarify Act. In line with this, the Commodity Futures Trading Commission (CFTC) Chairman also indicated similar efforts.

This is expected to remove existing legal uncertainties and provide a clear roadmap for token issuance, specifically including a 'safe harbor' clause that codifies the loss of security status for tokens. As a result, companies looking to issue virtual assets are expected to be able to pursue their businesses in a more predictable environment, free from uncertain regulatory conditions.

Treasury Secretary Janet Yellen's remark about a $1 trillion Treasury buyback is being interpreted as a signal to convey strong policy intent to the market, rather than an actual commitment to purchase the entire amount. By suggesting the possibility of such a large-scale buyback, the government emphasized its proactive stance in market stabilization and liquidity provision.

Following Yellen's remarks, Bitcoin's price rose from $76,000 to $81,000. This indicates that market participants reacted positively to the government's policy moves.

The SEC's announcement of 'Regulation Crypto' signals the possibility of a new asset class. This regulation allows for the issuance of tokens under existing U.S. fundraising methods, 'Regulation A' (Reg A) and crowdfunding. This is a significant change, providing a clear roadmap for companies to legitimately issue tokens and raise capital.

In the past, many companies had to issue tokens through offshore entities in places like Bermuda or Seychelles due to regulatory uncertainty. However, with this new regulation, legitimate issuance within the U.S. is expected to become possible. This is anticipated to accelerate the institutionalization of the virtual asset market and open opportunities for companies to utilize innovative fundraising methods.

Ultimately, 'Regulation Crypto' could form the basis for a new type of digital asset market, different from existing security tokens (STO) or utility tokens.

U.S. securities regulation has historically involved dual application of federal regulations and individual state laws. This has subjected companies attempting to issue virtual assets to a complex and onerous process of separate registration in each state.

However, 'Regulation Crypto' now includes exemption provisions designed to alleviate the burden of this dual regulation. Through these exemptions, companies are expected to be able to issue tokens without having to register individually in every state.

In the United States, the term ICO (Initial Coin Offering) has long been taboo. Due to various incidents in the past when there was no clear regulation, ICOs effectively became subject to securities law regulation, making legitimate execution impossible.

However, with the announcement of 'Regulation Crypto,' this perception is changing. This regulation establishes a path for companies to legitimately issue tokens, providing a foundation for them to shed their past negative image and enter the institutional framework.

With this regulation, the path for ICOs to be theoretically allowed and institutionalized within the United States has opened. Although not all types of ICOs will be permitted, the fact that this possibility has been codified in writing holds significant meaning.

Companies will be able to legitimately issue tokens if they comply with established guidelines, including disclosure obligations. This lays the groundwork for the emergence of a new asset class that is neither a traditional security nor a pure cryptocurrency like Bitcoin.

'Regulation Crypto' establishes clear boundaries regarding the security status of tokens. The SEC maintains its stance that tokens themselves are not securities, but rather the 'investment contracts' that arise during the token sale process may constitute securities. This reaffirms the existing position that security status is determined by the structure of the investment contract, not the token itself.

This regulation is interpreted as opening general token sale channels rather than directly addressing the tokenization of corporate stocks. The tokenization of corporate stocks is classified as a separate issue to be handled under innovation exemption.

The extensive deregulation measures presented this time are not merely a legal framework but carry an intentional message aimed at revitalizing the market. This can be seen as an attempt to move away from the rigid regulatory framework of former SEC Chairman Gary Gensler's era.

The government is providing legal clarity to entrepreneurs, thereby encouraging legitimate innovation and sending a message that it is paving the way for the virtual asset industry to contribute to the U.S. economy.

Former SEC Chairman Gary Gensler's approach to virtual asset regulation was criticized for arbitrary judgments and excessive litigation, exploiting legal loopholes. At the time, Gensler fostered a perception that ICOs were risky and bad, establishing a practice of prioritizing regulatory agency judgment even in the absence of clear laws. This led to numerous lawsuits during the Biden administration, increasing market uncertainty.

Gensler's approach was criticized as 'regulation by enforcement' without clear legal grounds. This method hindered the development of new technologies and industries, and caused innovative companies to leave the U.S. market.

In particular, the negative perception of ICOs made it difficult for companies to use legitimate fundraising methods, which suppressed the growth of the virtual asset industry. Criticism was raised that regulatory agencies sought to control through lawsuits rather than providing clear guidelines within the legal framework.

Consequently, Gensler's era of regulation is seen as having hindered innovation and reduced market predictability. 'Regulation Crypto' is an attempt to move away from these past regulatory methods and increase clarity and predictability.

Former President Donald Trump referred to Bitcoin as a 'strategic reserve asset,' again hinting at the possibility of the U.S. government purchasing Bitcoin, which was previously considered impossible. Although there was no official promise of purchase, this statement served as a strategic message, injecting significant anticipation into the media and market.

Trump's remarks can be interpreted as part of his presidential campaign, intended to garner support from pro-virtual asset industry voters by expressing a favorable stance on virtual assets.

Former President Trump emphasized the influence of the White House working group by stating that 'Paul Akin and his group will come and report to me.' Paul Akin is known as a key figure in the virtual asset working group, which includes Treasury Secretary Janet Yellen, and the Chairs of the SEC and CFTC.

Instead of directly promising a purchase, Trump's mention of the working group's activities stimulates market participants' imagination and creates anticipation that Bitcoin could be discussed as an important issue at the government level.

To date, there are no concrete developments regarding the U.S. government's actual Bitcoin purchase plans. Nevertheless, former President Trump's remarks and meetings between regulatory authorities are once again fueling discussions about the possibility of Bitcoin purchases.

There was a precedent last July when a similar purchase expectation arose following the White House report, which led to Bitcoin price movements. Currently, dialogue and discussions between regulatory authorities are ongoing, but it has not yet reached the stage of confirming actual Bitcoin purchases.

Treasury Secretary Janet Yellen emphasized that virtual assets could emerge as an alternative in the process of seeking solutions for long-term Treasury bond issues. The possibility of capital flowing into the virtual asset market to resolve liquidity problems that might arise when converting long-term Treasury bonds into short-term ones was suggested.

This highlights how government fiscal policy and the virtual asset market can be connected in unexpected ways.

In the past, an increase in stablecoin issuance was thought to have a direct one-to-one causal relationship with rising virtual asset prices. The logic was that quantitative easing policies like Operation Twist would lead to increased stablecoin liquidity, positively impacting the virtual asset market. However, with changes in market structure, this logical connection has weakened.

The virtual asset market is currently being reconfigured around spot Exchange-Traded Funds (ETFs), with increasing participation from institutional investors. As a result, the inflow of capital from traditional financial markets is having a greater impact on virtual asset prices than stablecoin issuance.

Therefore, while an increase in stablecoin issuance can act as a 'narrative,' its power to directly drive up virtual asset prices through technical or economic necessity is weaker than before.

In the virtual asset market, prices can fluctuate based solely on certain narratives or expectations, even without a direct logical link. For example, despite no direct technical causal relationship between Ripple Labs' activities and the price of Ripple (XRP) coin, its price sometimes rises due to investor expectations.

This acts as a self-fulfilling prophecy, where investors believe a certain asset will rise based on a 'narrative' and, as a result, the price actually increases.

The Senate cloture vote for the 'Clarity Act,' scheduled for September 15, is expected to be a highly significant turning point that will determine the future direction of the virtual asset market.

The passage of this bill and the resulting regulatory clarity will profoundly impact the development of the virtual asset industry and investor sentiment.