Bitcoin Exchanges Rushing Toward Regulation

Bitcoin's volatile past week captured the attention of market observers, with many in the crypto community surprised to see Sunday's market drop resulting in a sub-$7K BTC price.

Despite the recent volatility, over the past few weeks, there have been multiple announcements from large-scale crypto exchange platforms seeking to cement regulatory relationships with the SEC. The often-touted entrance of institutional capital into the cryptocurrency market has been promoted as a potential bull run catalyst since the first quarter of 2017.

Despite announcements such as the opening of a Bitcoin futures trading desk by Goldman Sachs, institutional capital is yet to make a notable impact.

Goldman Sachs-backed cryptocurrency startup Circle also expressed intent to pursue a federal banking license and registration as a securities exchange in a recent interview with Bloomberg.

Fundstrat Analyst and Bitcoin bull, Tom Lee, predicted a significant positive price shift resulting from the move toward regulatory compliance.

The rush toward SEC licensing and the establishment of a fully-regulated platform, states Lee, is an "Implicit acknowledgment" that regulatory perspective is swinging toward the positive.

"We believe the regulatory picture is now improving - best evidenced by Coinbase and Circle 'running towards' regulation. We are basing this on the notion that Coinbase and Circle would only take these actions if such was the case."

"I believe Bitcoin's price will continue to fluctuate between $6,500 and $8,500 in the coming weeks. In the medium-to-long term, bitcoin's value should go up, as big institutions enter the crypto space in a bid to gain first-mover advantage, further legitimizing the market."

The establishment of fully-regulatory compliant exchange platforms is necessary for continued retail investor adoption and institutional investment.

The potential implementation of technical improvements like Schnorr signatures - a restructuring of the signature process that could improve the efficiency of validating Bitcoin transactions - could deliver a boost to scalability, accelerating mainstream adoption as the Bitcoin blockchain inches closer to competing with existing large-scale payment platforms.