A lot of cryptocurrency investors and enthusiasts out there are used to a mix of bad and good news. The news this time around is not that good. The digital currency market made it to the headlines earlier this month when a former regulator in the United States stated that Ethereum and Ripple are illegal, he said they are noncompliant securities.
The Possible Effect of This News
This bad news could mess things up for digital currency markets and weaken the liquidity of both Ethereum and Ripple. But it is not over yet. According to reports, it would seem right now that authorities will not be taking regulatory and monetary measures against the trade of digital currencies anytime soon.
The Present Available Information
The primary purpose of initial coin offerings (ICOs) is for fundraising in order to create an online service (Telegram used the same method, and it worked). ICO offered tokens are redeemable in time. Shareholders of initial coin offerings deem these tokens as a hope to earn more so that more sales will help them and result in profits.
However, some initial coin offerings have been full-fledged frauds. The regulators in the United States have been slow when it comes to the regulation of this market, but the regulators have issued several warning (most notably in July 2017).
The head of the Security and Exchange Commission – Jay Clayton sent out a notice that all sales of tokens must be considered as a security transaction. As if the Security and Exchange Commission goes against Ethereum and Ripple (two relevant digital currencies) it could result in an ugly situation in altcoin markets.
Observers Share Their View about SEC
Some market observers think that the SEC has issues against Ripple and Ethereum. But the overall consensus is that the Security and Exchange Commission does not actually want to go against the crypto market, they have a lot more to do.