The U.S. Securities and Exchange Commission went ham on crypto exchanges last week by filing toothy lawsuits against Binance and Coinbase. While crypto exchanges and altcoins are in the hot seat, the regulator is leaving BTC and ETH alone, at least for now.
When news of the SEC’s lawsuit against Binance and Coinbase hit markets, the prices of all assets plunged across the board. BNB crashed 10% in 24 hours. It lost another 5% on Sunday and kept dumping on Monday to a multi-month low at $223.
Bitcoin prices plummeted from the $27,100 handle Sunday to $25,750 Monday. But the world’s oldest and most well-capitalized cryptocurrency blockchain recovered quickly.
BTC and ETH Rally with SEC’s New Suits Priced in
BTC bounced back to above the $27,000 level on Tuesday, even as news of a second SEC lawsuit against Coinbase spread.
Although the agency increasing enforcement activities against the crypto industry harmed crypto prices last week, it appears BTC and ETH will emerge from the regulatory heat unscathed. Bitcoin is already up 2.75% on the five-day window, with the Binance and Coinbase lawsuits priced in.
Meanwhile, Ethereum had a massive rally with the latest SEC news priced into the market. Ether prices on crypto exchanges jumped from $1,800 at 1:30 pm UTC Tuesday to a high of $1,890 before the session turned over. That was a cool 5% intraday gain for the second-largest crypto.
SEC Leaves Bitcoin, Ether, and Ripple Alone
The SEC has named these 19 tokens as securities throughout the Binance + Coinbase filings.
This could have massive implications for these tokens, and the industry as a whole.
Some quick thoughts.👇 (1/9) pic.twitter.com/kYQTK8lvoe
— Miles Deutscher (@milesdeutscher) June 8, 2023
The legal theory of the SEC’s lawsuits against the two major crypto exchanges hinges on a 90-year-old law. The Securities Act of 1933 was written to protect investors in the aftermath of the 1929 stock market crash.
Between the Securities Act and the “Howey test” from a 1946 Supreme Court decision, the SEC intends to persuade U.S. courts that many cryptocurrencies offered for sale and exchange by Coinbase and Binance meet the legal definition of securities.
If the SEC’s theory prevails in court, then Coinbase, Binance, and any other crypto exchange would be required by the U.S. federal government to register with the agency and comply with the rules they set to protect retail investors.
But even in that worst case outcome of these legal battles, Bitcoin, Ethereum, and Ripple may emerge unscathed. The SEC didn’t bother to name them as securities in either the Binance or Coinbase lawsuit.
Retail investors, as well as institutions, are apt to see less risk and more upside in these cryptocurrencies as a result. The SEC’s reluctance to push its luck with these commodities is incredibly bullish for XRP, ETH, and BTC.
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