What happened 

The cryptocurrency market is on fire today after federal regulators seemed to give the industry an opening for more securities. U.S. Securities and Exchange Commission Chair Gary Gensler reiterated support for crypto-related ETFs, and Federal Reserve chair Jerome Powell said he doesn't plan to ban cryptocurrencies. 

Bitcoin (BTC 1.66%) made the most notable move of the day, jumping more than 10% at one point. As I'm writing at 11:30 a.m. EDT, the cryptocurrency is up 9.2% in the last 24 hours. Ethereum (ETH 1.52%) is up 7.4% over the same time, Dogecoin (DOGE -0.93%) has risen 6.3%, and Solana (SOL 1.83%) is up 14.4%. 

Bitcoin visual on a computer chip.

Image source: Getty Images.

So what

I'll start with Powell's comments because I think they've gotten the most attention in the crypto world. In testimony to Congress on Thursday, Powell said the U.S. doesn't have plans to ban cryptocurrencies. This is notable because China recently made nearly all crypto transactions and activities illegal. If the U.S. had followed suit, it could have crushed the industry.

Gensler's comments about allowing ETFs that invest in crypto futures contracts, rather than in cryptocurrencies themselves, could also bring more buyers into the industry. No ETFs are available yet, but they could be coming, and that could open up a new line of securities for investors, plus more futures trading.

Cryptocurrencies have been seeking some kind of validation from regulators, and it seems we're moving in that direction. Defining what's legal and what isn't, how tax rules need to work, and how companies are going to be regulated will be a messy process, but it's needed for cryptocurrencies broadly. It seems that this week the U.S. took steps to validate cryptocurrencies, unlike China, which is banning them. 

Now what

Slowly but surely, it appears that cryptocurrency will be validated by regulators in the U.S. That doesn't mean that it'll gain broad acceptance as a currency or that valuations will rise, but the fact that it won't be made illegal or heavily restricted is good news for today. 

As for the jump in valuations, I don't see today's move as driven by anything more than speculation about the future of Bitcoin and other cryptocurrencies. But that's nothing new for this industry as companies and users try to find utility for cryptocurrencies as more than just a speculative investment. 

Today's move may be larger than most, but volatility comes with the territory for crypto investors. It's not uncommon to see 10% or 20% moves in the price of a cryptocurrency, even Bitcoin, over the course of a few days or weeks. Today's move is bigger than we've seen in the past, and if ETFs or other regulations that bring money into the industry are on the horizon, it could be a good sign. But keep in mind that crypto prices can go down just as fast as they can go up, so next week the positive trend could reverse course, especially if positive catalysts don't continue for the industry.