- The US Securities & Exchange Commission has failed to provide adequate clarity on how several crypto tokens are labeled as securities.
- Crypto traders ask what the next steps are and whether these assets can be registered as securities and traded on Nasdaq.
- Researchers believe that the SEC’s classification would force a closing of several altcoin pairs and result in the delisting on crypto exchanges.
The US Securities & Exchange Commission (SEC) initiated a regulatory clampdown on digital assets on June 5, filing lawsuits against Binance and Coinbase. The regulator updated its allegations against the two exchanges, labeling several cryptocurrencies as “securities.”
The SEC tagged as securities cryptocurrencies worth a combined market capitalization of $100 billion. While tokens identified as securities suffered a decline in price, holders and crypto market participants wonder what’s next for these assets and whether they can be registered and traded on exchanges like Nasdaq.
Also read: XRP price settles above $0.50, wiping out gains from Hinman documents release
What’s next for crypto tokens labeled as securities
The US SEC has labeled more than 60 assets as securities and updated the list in the lawsuit against Coinbase and Binance. The immediate impact of SEC’s actions was a large-scale outflow of capital from altcoins and a decline in their prices.
Tokens identified as securities by the US SEC
Exchanges and social trading platforms like eToro and Robinhood considered the delisting of assets that the SEC tagged as securities. Market participants are speculating about what’s next for these cryptos.
A crypto trader (identified as @Javacrypto_) asked in a recent tweet whether these assets can get registered as securities and trade on platforms like Nasdaq. A review of the content of Hinman's emails and internal messages of SEC executives revealed that there is a lack of clarity on the test or analysis that helps decide whether an asset is “sufficiently decentralized” or not. The release of the documents has increased the confusion among experts and analysts.
Security classification to affect US crypto exchanges and traders
Vetle Lunde, senior analyst at K33 Research, told Reuters that security classifications would affect all US-based crypto exchanges and result in a forced closing of various altcoin trading pairs.
The SEC’s move, therefore, makes it expensive for both the tokens deemed securities and the crypto exchanges that list them. Moreover, securities can only be traded by brokers on regulated exchanges involving clearing houses and transfer agents and physical certificates. This increases the hurdles for registration of the tokens as securities and creates new challenges for traders seeking to access and trade them.
Further, the SEC’s classification could hamper the DeFi ecosystem tokens, Ethereum-alternatives like Solana and Cardano, that support several assets on their blockchains.
The overall crypto market capitalization declined by 2.65% between June 5 and the time of writing, according to CoinGecko data.
Total crypto market capitalization chart
Further decline in market capitalization is likely, as altcoins crumble under selling pressure from the regulatory crackdown.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended Content
Editors’ Picks
Celebrity meme coins controversy continues amid Pump.fun revenue dominance
Pump.fun outperformed the Ethereum blockchain on Tuesday after raking in $1.99 million. Following this achievement, a meme coin based on actress Sydney Sweeney was the subject of controversy after its developers dumped their bags on investors.
PEPE's on-chain metrics indicate potential rally after weeks of silence
PEPE has struggled to see any significant price move after reaching an all-time high in May. Increased adoption rate and low MVRV ratio indicate a bullish run may be on the horizon. A single PEPE outflow from Binance worth $14.7 million gives credence to signs of bullish expectation.
Ethereum has failed to overcome key resistance despite bullish sentiment surrounding ETH ETF
Ethereum (ETH) is down more than 1.4% on Tuesday following another ETH sale from the Ethereum Foundation. Meanwhile, crypto exchange Gemini's recent report reveals that ETH ETF could see about $5 billion in net inflows within six months of launch.
Crypto community blasts Polkadot following report of treasury spending
Polkadot reports $87 million of treasury spending during H1. Crypto community members expressed harsh feelings toward the DOT team's high spending. DOT is up more than 2% in the past 24 hours but risks correction following the report.
Bitcoin: BTC price correction could end in July, according to seasonal data
Bitcoin (BTC) price appears poised for a decline this week, influenced by slight outflows in US spot ETFs, selling activity among BTC miners, and a combined transfer of 4,690.28 BTC to centralized exchanges by the US and German governments.