Insights Trends Crypto is Weathering Regulatory Storms

Crypto is Weathering Regulatory Storms

July 17, 2023 Trends
BITmarkets | Crypto is Weathering Regulatory Storms

Two major events within the crypto sphere have sparked sharper regulatory scrutiny from financial watchdogs; the unprecedented crash of Terra Luna in May of 2022 and the infamous collapse of the FTX cryptocurrency exchange six months later.

In a frenzy of lawsuits, the United States Securities and Exchange Commission (SEC) filed 13 charges against popular cryptocurrency exchange Binance and its founder Changpeng Zhao on June 5th of the current year, alleging the exchange with operating unregistered exchanges, misrepresenting trading controls and oversight on the Binance US platform, and the sale of unregistered securities.

Others caught in the net

Little more than a month after the SEC action, a report by Wall Street Journal revealed Binance has laid off more than 1,000 employees in recent weeks amidst the regulatory crackdown.

While the exchange highlighted that it shall defend itself vigorously against any allegations, this move may be seen as a cost-cutting measure following the scar to the exchange’s reputation which have likely affected its profitability. Or, this can be seen as a move to dismiss the ‘bad apples’ from the basket; it’s all about perspective.

One day after the Binance lawsuit, the SEC sued Coinbase from breaking U.S. securities rules, alleging the exchange to have operated as an unregistered securities exchange which is seen as a law-evading maneuver in the eyes of the SEC.

This includes its staking program, which the SEC believes did not reward products which are classified as ‘securities’; the hot word of the month. At the time of writing, 68 cryptocurrencies have been deemed as securities by the SEC, including Solana (SOL), Cardano (ADA), Cosmos (ATOM) and Polygon (MATIC).

More hope on the crypto scene

Crypto market participants who have grown skeptical about the longevity of the industry over the long crypto winter of 2022 were given a reson to be bullish in a historic partial win for Ripple Labs.

On July 13th, Judge Analisa Torres ruled partially in favor of Ripple Labs in a case brought forward by the SEC which dates back to 2020, granting summary judgment in favor of Ripple Labs after ruling XRP, the native token of the firm, is ‘not a security’.

This boosted the trading activity and market cap of Ripple's XRP, which witnessed quite a status jump as it became the industry’s 4th most valuable cryptocurrency.

After being in a cloud of suspicion, XRP’s partial victory marked a significant milestone, sparking a fresh wave of interest in the popular cryptocurrency and the industry as a whole.

Sources:

https://cointelegraph.com/news/sec-labels-61-cryptocurrencies-securities-after-binance-suit

https://cointelegraph.com/news/sec-sues-coinbase-crypto-exchange

https://cointelegraph.com/news/ripple-wins-case-against-sec-as-judge-rules-xrp-is-not-a-security

https://cointelegraph.com/news/ripple-xrp-price-market-cap-jumps-sec-ruling

https://beincrypto.com/full-list-cryptos-securities-sec-lawsuit-binance-coinbase/

https://www.wsj.com/articles/binance-lays-off-over-1-000-employees-d59ff6ad?mod=latest_headlines

https://www.reuters.com/technology/binance-lays-off-over-1000-employees-wsj-2023-07-14/

https://coinmarketcap.com/currencies/xrp/

Try to invite your friends and earn together

Related articles