Within a 24 hour period, the price of the largest cryptocurrency per market capitalization, Bitcoin, has fallen by 10%. While this is discouraging, it’s still better off than some tokens with low market capitalization that have fallen by over 20%. Tokens on the ERC20 network are suffering the most right now as they are falling, not just against the USD but against Bitcoin. Even coins that are backed with strong communities and active developers like WanChain, Waltonchain, ICON, LISK, Golem, and Ontology have declined rapidly within a seven day period. Not too long ago, BAT experienced a significant unexpected spike in price. Unfortunately, it has now fallen by more than 36% since its Coinbase listing announcement.
Could The SEC Be Responsible For This Bearish Market?
Regulatory uncertainty has been one of the foremost problems that have plagued the cryptocurrency industry. While the SEC mainly pays attention to cryptocurrencies that are securities, the amount of fraudulent projects that prevailed in the industry earlier in the year has made the SEC cautious about almost every project.
From the recent listing of ZRX and BAT on CoinBase, we can be sure that these projects aren’t securities. Everyone knows that CoinBase is careful when it comes to listing tokens as it doesn’t want to get into trouble with the regulators for listing unregistered securities. Notwithstanding, the SEC is allegedly making plans to take down many exchanges and shut down a lot of ICO projects that do not meet up with requirements. This is according to the information from a litigation attorney who is familiar with the matter, Jake Chervinsky. In his words:
“Many enforcement actions are confidential until after they have been resolved. This is done to protect the government and the defendant. This is why the SEC settled this case before making any announcement. So, the fact that you’ve not heard any news about most of those subpoenas the SEC forwarded them last year doesn’t mean the matter has died down. There are dozens of investigations going on behind the scenes and the results will soon be made known to the public”.
Bitcoin (BTC) Price Today – BTC / USD
A while ago, the SEC charged Zachary Coburn, co-founder of an Ethereum-based platform known as EtherDelta with the distribution of unregistered securities. This means that the SEC has a vivid record of what makes a cryptocurrency a security and may have dozens of these cryptocurrencies in its list. Not too long ago, the SEC announced that Coburn had agreed to pay $75,000 as penalty, $300,000 in disgorgement and $13,000 in prejudgment interest. Keep in mind that the details of the case were released after settlement between Coburn and the SEC and not before.
ICO Projects Vs The SEC
While the cause of the price meltdown isn’t clear yet. It’s possible that some underground work by the SEC may be affecting the price of tokens. However, because the market is so volatile and unpredictable, it’s difficult to pinpoint a catalyst. All anyone knows for sure is that the SEC is going to crack down on the cryptocurrency industry in the coming months. Many of the pending cases against ICOs and exchanges will be revealed.
This regulatory uncertainty in the ICO market has already led to a decline in the number of willing investors. People are losing interest in investing in tokens with small market capitalization. Only a proper guideline by the SEC will offer investors clarity.