Changing Regulatory Landscape: Coinbase CEO’s Revelation and its Ripple Effect on Cryptocurrency – Coinpedia Fintech News
As the United States Securities and Exchange Commission (SEC) files lawsuits against major cryptocurrency exchanges Coinbase and Binance, Coinbase CEO Brian Armstrong sheds light on the changing tone of SEC’s inquiries in the past year.
This development has significant implications for the cryptocurrency industry, potentially transforming the market that has operated largely outside regulatory frameworks.
In the face of these legal battles, it becomes crucial to understand the evolving landscape of cryptocurrency regulation and its potential impact on investors and market participants.
Read on to get an in-depth understanding of the development.
SEC’s Lawsuits: Coinbase and Binance in the Spotlight
The SEC’s lawsuit against Coinbase and Binance represents a major escalation in the regulatory crackdown on the crypto industry. The SEC’s move seeks to assert its jurisdiction over the market, challenging the notion that tokens are not securities and should remain outside the purview of the commission. While the cases against the two exchanges differ in nature, they both point towards the SEC’s increasingly aggressive campaign to bring cryptocurrencies under the umbrella of federal securities laws.
Coinbase: Allegations of Evading Disclosure Requirements
Coinbase, a prominent cryptocurrency platform, is accused of evading disclosure requirements and operating as a middleman on billions of dollars worth of crypto transactions since at least 2019. The SEC claims that Coinbase is trading at least 13 crypto assets that should have been registered as securities, including tokens such as Solana, Cardano, and Polygon. The lawsuit aims to recoup ill-gotten gains, impose civil fines, and seek injunctive relief.
Binance: Operating a “Web of Deception”
The world’s largest cryptocurrency exchange, Binance, faces allegations from the SEC of operating a “web of deception.” The lawsuit filed against Binance and its CEO Changpeng Zhao accuses the exchange of mishandling customer funds, misleading investors and regulators, and violating securities rules. If successful, these lawsuits could reshape the crypto market by establishing the SEC’s jurisdiction and paving the way for increased regulation.
The SEC’s Crackdown & Coinbase’s Stock
The great crypto reckoning spearheaded by the SEC this week caused significant collateral damage, partially impacting Coinbase stock. As the regulatory authority announced back-to-back lawsuits against major exchanges, prices of crypto assets linked to the industry experienced a sharp decline.
Coinbase shares, already down 9% on Monday following news about Binance, plummeted an additional 21% at intraday lows on Tuesday when the company itself became the target of a lawsuit. Overall, the stock witnessed a staggering 28% drop from the previous week’s closing price at its lowest point on Tuesday.
When questioned by a news reporter for a global media about the possibility of Coinbase losing customers or banking partners, Coinbase CEO Armstrong expressed confidence, stating,
“As of now, we don’t perceive any imminent risk in that regard. Our partners remain enthusiastic about collaborating with us.” He also emphasized the diligent approach they are taking to address the unfriendly situation.
Following the decline, on Wednesday, Coinbase’s shares saw a 3.2% rise, reaching around $53.28. Notably, Cathy Wood’s investment funds increased their stake in the crypto company on Tuesday.
Market Impact and Investor Behavior
The regulatory actions against Coinbase and Binance have resulted in market volatility, with investors seeking stability amidst regulatory uncertainty. Interestingly, Bitcoin, the leading cryptocurrency, experienced a paradoxical benefit from the crackdown. After an initial plunge following the Binance lawsuit, Bitcoin rebounded, surpassing previous highs.
Bitcoin is currently trading at $26,337.21 (BTC Price Today), with a total market capitalization of $510.83 billion USD. And, the 24-hour trading volume stands at $17.26 billion USD.
The trend suggests that the SEC’s actions are making it challenging for alternative cryptocurrencies (Altcoins), thereby driving traders back towards Bitcoin.
The current price of Ethereum, the most popular Altcoin, stands at $1,840.11 (ETH Price Today), accompanied by a 24-hour trading volume of $7.22 billion. Over the past 24 hours, ETH has experienced a fall of 1.94%. Presently, it is 3.86% lower than its 7-day all-time high of $1,913.96. The circulating supply of Ethereum is approximately 120.23 million ETH.
As the SEC’s lawsuits against Coinbase and Binance unfold, the crypto industry stands at a crossroads.
The evolving regulatory landscape has the potential to transform the market, asserting regulatory jurisdiction and challenging prevailing arguments about tokens’ securities status.
Meanwhile, it’s important to ensure the development does not make any irreparable damage to the affected exchanges – more importantly the whole crypto industry.
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