A Discussion On How The Actions Of The SEC Impact The Cryptocurrency Prices

Why, when, and how of the cryptocurrency prices. Why is SEC not interested in regulating them?

All About Regulating Cryptocurrencies

As usual, the month of August has been a volatile one for digital currencies of all kinds and earlier the price of Bitcoin and Ethereum, as well as other digital tokens, dropped to some of the lowest levels of the year. Whereas BTC has since recovered and is now trading above $ 6,700 as ETH is still floundering trading significantly below $ 300. Hereafter in retrospect, many analysts are suggesting with the reason for the drop across the cryptocurrency industry that has to do with the actions of the US Securities Exchange Commission. As the price declines, corresponded with the announcement that the SEC has decided to postpone its verdict on the approval of a Bitcoin linked exchange-traded fund. 

Here this example is the latest of many cases in which the actions of the SEC seems to have impacted the prices of digital currencies and indeed the digital tokens that have become increasingly widespread as also popular, the SEC has then become a dominating presence in what is the daily crypto news cycle. It has whether to decide about the status of digital currencies regulating new products like ETFs, or futures, as well as doing any number of other things linked to the hot new space, where the SEC has come to exert a huge influence on the price of digital currencies. 

Seeing the DAO Tokens as Illegal Securities

The SEC has announced its decision that DAO tokens are which had been distributed via initial coin offering were in fact securities. While these tokens had not been registered with the SEC before the ICO placing them in violation of the law, as the immediate aftermath impacted DAO were the ramifications of the decision were widespread as the SEC showed that many ICOs could be in trouble too, as although the SEC did not press any charges at the time of the decision effectively changed the ICO game had been allowed to run freely without regulation for many moths up to that point.

It is interestingly observed that while the cryptocurrency world did negatively react to the news, the overall impact was minimal according to Coin Telegraph with the top five coins falling in price on the day of the announcement but relatively quickly recovered their value. 

How Was The Winklevoss ETF Application Denied

The SEC had earlier denied the second attempt by the Winklevoss brothers who thereby launched a Bitcoin ETF. As the SEC determined it was not convincing by the brothers’ claim that Bitcoin markets are inherently resistant to manipulation deciding to reject their efforts to launch an ETF for that and other reasons. Thereby the crypto markets reacted swiftly and negatively as BTC lost more than $ 400 in value in just 3 hours, as many other coins declined as well as however, those leading digital currency by their market cap has regained its value within around 24 hours. 

Why Was VanEck SolidX ETF Denied

Considering that most recently when the SEC pushed back is the announcement on the VanEck and SolidX ETF plans, the market had panicked as the BTC lost about $ 500 in six hours and continued to decline in the days following the announcement. It was that Ripple lost more than 20% of the value and interestingly the news was decidedly neutral as the SEC did not indicate that it was rejecting the ETF which was as it had when being done in the case of the product of Winklevoss. It was instead simply announced that it would delay the announcement of the decision. Even then the markets reacted strongly. 

To Conclude The SEC And CFTC Jointly Recognize Cryptocurrencies

Thereby it does seem that the SEC is only capable of pummeling crypto prices as it’s useful to look at an earlier example as the SEC and the CFTC held a joint hearing regarding cryptocurrencies, ICOs, and blockchain. Hereby the regulators recognized the importance of the new industry stressing that fair regulatory frameworks were key to its long term success as the representatives also indicated that in case there was no Bitcoin, then surely there would be no blockchain

This is why markets reacted with a strong bullish trend and came about at a key moment as China and India were moving to crack down on cryptocurrency and the markets had been slumping. Therefore BTC and ETH both gained about 20% in the days following the hearing. To sign off there is more that is needed to regulate cryptocurrencies. The credibility is yet to be seen. 

What's Your Reaction?