While the SEC’s designation of certain cryptocurrencies as securities has shaken the market, the developers behind these assets have vehemently rejected the regulator’s characterization.
The lawsuit filed by the US Securities and Exchange Commission (SEC) against Binance and Coinbase has caused widespread volatility in the cryptocurrency market.
As part of its legal process, the regulator has designated 19 new cryptocurrencies as securities. According to the SEC, “Coinbase makes these crypto assets available for trading without restricting transactions to those who might treat the asset as anything other than an investment.”
Market turmoil with the entry into force of the securities classification
After the rating, many of these digital assets experienced a sharp decline, reaching their lowest prices yet. These assets include Cardano (ADA), Solana (SOL), Algorand (ALGO), Polygon (MATIC), and Filecoin (FIL) to name a few.
According to CoinGecko data, both ADA and SOL have seen significant depreciation. Each coin lost 20% and 18%, respectively. ALGO, MATIC, FIL, FLOW, BNB, SUI and ARB also saw their prices fall, as investors grappled with the implications of potential regulatory restrictions.
Within days of the lawsuit, cryptocurrency traders lost more than $320 million in liquidations, According to data from CoinGlass. Meanwhile, the Robinhood trading app announce It will stop supporting some crypto assets starting June 27th.
Development companies defend the token’s status
While the SEC’s designation of these cryptocurrencies as securities has shaken the market, the developers behind these assets have vehemently rejected the regulator’s characterization.
Input Output Global, the company behind Cardano, refuted the SEC allegations. The company said:
“An ADA security is under no circumstances subject to US securities laws. It never has been.”
Likewise, the Solana Foundation has disputed the characterization of SOL as wishful thinking. The company also affirmed its commitment to working with regulators in pursuit of regulatory clarity within the country. For its part, Polygon Labs has also indicated that its business has not targeted the United States specifically, pointing out its global community in the process.
After these clarifications, ADA, SOL and MATIC have partially returned, recouping some of the losses incurred last week. ALGO and FLOW also recovered by more than 12.5% and 10.5% respectively, putting a smile on the faces of its holders. Bitcoin also saw a surge in demand, confirming its market dominance as altcoins struggled.
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An experienced writer with hands-on experience in the financial technology industry. When not writing, he spends his time reading, researching, or teaching.
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