Triaconta Weekly #260

The following topics will be addressed in this weekly:

  • Bundle performance
  • Winners & Losers
  • Market overview

Bundle performance
The crypto market experienced a tough week due to indictments by the US regulator SEC against Binance and Coinbase. In the indictment, the SEC calls several tokens a crypto asset security (“crypto asset security”), among them ADA, SOL, MANA , AXS, CHZ, MATIC, FIL, ATOM and ALGO. The tokens themselves are not being sued, but they have dropped significantly in price as a result. The SEC is accusing the crypto exchanges of not registering as a securities exchange which would be mandatory if these tokens were actually a security. Certainly Coinbase, which is a Nasdaq-listed company, has been trying with all its might for years, but in fact it cannot do so at all due to the unclear status of crypto tokens and their lending, and staking services under US law.

Big3:
1 Month: +6.31% | 7D: -0.74% | 24H: +0.68%

Top30:
1 Month: -6.18% | 7D: -8.45% | 24H: -0.19%

Penny:
1 Month: -10.06% | 7D: -9.06% | 24H: +0.23%

DeFi:
1 Month: -6.71% | 7D: -7.81% | 24H: -0.52%

Winners & Losers
Almost all tokens are down this week with XRP (+4%), Tron (+2%) and Stacks (+5%) added in its last revision as positive exceptions. The biggest decliners were Fetch.AI (-17%) and SEC-listed cryptoassets Algorand (-16%) and FIlecoin (-16%). Binance’s BNB token fell 15% as did Cardano. This is highly unusual for top 10 tokens and is a direct result of the SEC indictment.

Market overview

Europe is leading the world with regulation of digital tokens and service providers with the passing of Markets in Crypto Assets (MiCA) legislation this week. Strict but clear rules are also coming into force in Singapore and Hong Kong, allowing consumers and businesses to finally know where they stand when it comes to crypto tokens. The US Congress continues to lag hopelessly behind, creating a situation where arbitrary tokens and even large service providers like Binance and Coinbase can suddenly be sued by regulator SEC based on laws meant for securities from the 1930s. According to the SEC chairman, the rules are clear and applicable unabated and new digital tokens are also not needed at all because the dollar and euro are already digital right?! The market reacted with shock to the indictment of the world’s largest exchange, Binance, dropping more than 5%. When the next day the largest exchange in America, Coinbase, was also sued, people pretty much gave in. Big investors bought up the cheap coins en masse and many prices recovered somewhat.

In a statement, Binance said it had been actively cooperating with an SEC investigation from the start and, above all, was extremely disappointed to be suddenly surprised with this indictment in the middle of a good-faith discussion to reach a negotiated settlement. Coinbase submitted everything they do in crypto to the SEC two years ago at their IPO (Coinbase has since been listed on the Nasdaq) and received official approval to go public. Now it turns out that in this approval process, the SEC only looks at whether the right forms have been filled in and not whether the company’s activities may be illegal in their eyes….

Coinbase itself has been trying for some time to force the SEC through a court to do its job and make crypto rules clear to the market, and so far the SEC has refused to respond. In light of this week’s new charge, the judge on Tuesday asked the SEC to respond to Coinbase’s request within a week. It will be very exciting this June 13 in the US anyway and we expect great volatility in the markets as a result.

  • Court documents in the SEC vs Ripple case will be made public on 13 June, including the internal emails prior to Hinman’s 2018 Ethereum speech.
  • The SEC has until 13 June to respond to the court’s request to answer Coinbase when they will provide clarity on crypto rules.
  • The US House Financial Services committee is holding a meeting on 13 June titled: Providing Clarity for the Digital Asset Ecosystem.
  • The FOMC meeting will determine 13 and 14 June whether or not there will be another interest rate hike.
  • The world’s central banks will meet in London on 13 and 14 June for discussions on central bank digital currencies, fintech and risk management in the current era.

Let’s hope that based on their many previous discussions with the SEC, the parties will come out of it quickly. If this turns into major lawsuits or we have to wait for US politicians for clear rules for the crypto market, it could take years and then America will very likely hardly play any significant role in this sector. For adoption of crypto in the world, we cannot actually do without the world’s largest capital market. Significantly, more than 80% of crypto trading is already currently taking place outside America.

In Europe and Asia, new rules have been agreed by all parties and there is certainty for crypto service providers. It sometimes seems that the actions in America are a battle between regulator SEC and CFTC over who gets to call the shots in the growing crypto market there. The status of crypto tokens as securities or commodities is key to the lawsuits against Binance and Coinbase. Regulating this new industry has unfortunately also become political, with Republicans generally in favour and Democrats (thus) seeming to want to kick it mainly out of America. The first judicial clarity on the status will come from the SEC’s two-and-a-half-year-long lawsuit against Ripple over XRP. A possible ruling in that case is expected within a few weeks and will set the tone for crypto in America.

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