While the SEC’s designation of some cryptocurrencies as securities has shaken the market, the development companies behind these assets have strongly rejected the regulator’s characterization.
United States Securities and Exchange Commission (seconds) The lawsuit against Binance and Coinbase has resulted in widespread volatility in the crypto market.
identified by the regulator as part of its legal actions 19 new cryptocurrencies as securities, According to the SEC, “Coinbase makes these crypto assets available for trading without restricting transactions that may treat the assets as anything other than investments.”
Market turmoil as securities designations come into force
Following the halving, many of these digital assets saw sharp declines, reaching their lowest prices ever. These assets include Cardano (ADA), Solana (Fifth note of musical scale), Algorand (ALGO), Polygon (MATIC), and Filecoin (FIL) to name a few.
According to CoinGecko data, ADA and SOL saw a massive drop in value. Each coin lost 20% and 18% respectively. ALGO, MATIC, FIL, FLOW, BNB, SUI and ARB also saw their prices decline as investors grappled with the impact of possible regulatory restrictions.
Within days of the lawsuit, crypto traders had lost over $320 million in liquidations, According to data from CoinGlass, Meanwhile, trading app Robinhood announced It will discontinue its support for some crypto assets from June 27.
Development companies defend token status
While the SEC’s designation of these cryptocurrencies as securities has shaken the market, the development companies behind these assets have strongly rejected the regulator’s characterization.
Input Output Global, the company behind Cardano, denied the SEC’s allegations. The firm said:
“Under no circumstances is the ADA a protection under the US securities laws. It never has been.
Similarly, the Solana Foundation opposed the characterization of SOL as a security. The company emphasized its commitment to work with regulators in pursuit of regulatory clarity within the nation. On its part, Polygon Labs also noted that its actions did not specifically target the US, pointing to its global community in the process.
Following these clarifications, ADA, SOL and MATIC all made partial recoveries and recouped some of last week’s losses. ALGO and FLOW also recovered by over 12.5% and 10.5% respectively, bringing a smile on the faces of their holders. Bitcoin has also experienced a surge in demand, asserting its market dominance, as altcoins struggle.
A seasoned writer with practical experience in the Fintech industry. When not writing, he spends his time reading, researching or teaching.
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