- Gary Gensler believes a majority of cryptocurrencies in the market will fail.
- SEC has filed lawsuits against leading crypto exchanges Coinbase and Binance.
The Securities and Exchange Commission’s (SEC) clampdown left the crypto market in chaos. However, the government agency had advice for Coinbase before firing the rockets on two of the largest crypto exchanges. British daily newspaper Financial Times (FT) reported the United States regulatory watchdog asked the platform to abandon trading of all digital assets except for Bitcoin (BTC).
SEC Appears to be Losing its Grip on Crypto Market
Brian Armstrong told FT about the instance recently. The act could be a push to lay authoritative hands on a wider crypto market. SEC chair Gary Gensler recently told Bloomberg that the crypto field is rife with frauds and hucksters. He also believes a majority of cryptocurrencies in the market will fail. In February 2023, the agency settled a lawsuit with digital asset platform Kraken for $30 Million.
In a report, German bank Berenberg foresees decentralized finance (DeFi) and stablecoins as SEC’s potential targets next. Any regulatory intrusion by the agency on the latter would naturally weaken the former’s strength. Stablecoins deliver a principal part of liquidity to the DeFi ecosystem.
However, the SEC’s clasp on the crypto industry appears to be loosening. Its lawsuit against Ripple is going out of their hands. Recently, a New York court ruled that sales of its native token XRP did not constitute investment contracts. The U.S. regulatory watchdog filed the case in 2020, however, failed to bring about a significant victory in its favor.
SEC recently warned about potentially misleading crypto audits. According to their official release, accounting firms must report to the SEC upon identifying malpractices. Moreover, The agency emphasized that public trust in the sector depends on the integrity of accounting firms conducting audit checks.
A Regulatory Tussle is Persistent
The cryptocurrency market took a nosedive following the regulator’s approach towards Coinbase and Binance in June 2023. Consequently, the total market capitalization fell by over 10% in a matter of days. However, it managed to recover within a week, returning above $1 Trillion in market cap.
Source: Cryptocurrency Sector’s Market Capitalization on TradingView
Major crypto assets plunged drastically during this period. Bitcoin declined by almost 10%, Ethereum (ETH) fell by nearly 13%. Cardano (ADA) and Solana (SOL) both went down around 30%. Additionally, metaverse tokens including Decentraland (MANA), The Sandbox (SAND), Axie Infinity (AXS) and more suffered an impact too.
SEC is engaged in a turf war against derivatives market regulator Commodity Futures Trading Commission (CFTC). The agency oversees virtual currencies when used in derivative contracts. Regulations play an important role for cryptocurrencies’ entry into the mainstream economy. Currently, lawmakers across the globe are developing policies to regulate digital assets in an efficacious way.
The sector sits atop a $1.18 Trillion market cap with 24-hours sales rising by over 50% at the publication time. Bitcoin and Ethereum collectively account for almost 70% market dominance.
