The recent statement from the U.S. Securities and Exchange Commission (SEC) has sent the cryptocurrency industry into a state of panic, and that has transcended from words to the real world, where the value of almost all cryptocurrencies has dropped in varying levels. There has been a Bitcoin drop in value, Ethereum drop in value and Litecoin drop in value.
CoinMarketCap at press time, shows that all top 10 coins are in red. The rest down the line do not look very different either.
What happened that caused the value to drop this much and on such a scale?
After its months’ long investigation and discussions on initial coin offerings (ICOs), cryptocurrency trading and cryptocurrency-backed investment assets, the SEC released a statement dated March 7, 2018, where it declared that any cryptocurrency exchange needs to register with the SEC as a “national securities exchange” or follow further actions accordingly.
“If a platform offers trading of digital assets that are securities and operates as an ‘exchange,’ as defined by the federal securities laws, then the platform must register with the SEC as a national securities exchange or be exempt from registration.”
It further mentioned that the platforms which refer to themselves as “exchanges” give off the impression of having met the regulatory standards expected from a national securities exchange.
“The SEC staff has concerns that many online trading platforms appear to investors as SEC-registered and regulated marketplaces when they are not. Many platforms refer to themselves as “exchanges,” which can give the misimpression to investors that they are regulated or meet the regulatory standards of a national securities exchange.”
Needless to say, the statement sparked widespread uncertainty among cryptocurrency traders due to the added regulations that functional cryptocurrency exchanges could now face, spreading fear about their continued operations or the legal standing of the security of funds invested with them, among other pressing concerns.
This had a direct result on the value of almost all cryptocurrencies.
As stated above, it caused the value to drop significantly for the top 5 by market cap: Bitcoin, Ethereum, Ripple, Bitcoin Cash, and Litecoin, with some of them hitting their lowest values in days.
For instance, Bitcoin saw a drop in value, just dropping below $10,000 with a value of $9,875.25 at press time, which is its lowest in 7 days.
The last time it had seen its lowest value in days was on February 26, with the value being $9,501.73.
Another leading cryptocurrency, Ethereum witnessed a drop in value, hitting a 12-day low with $747.12 at press time, as compared to its lowest value of $794.79 on February 23.
While the Litecoin drop in value was also somewhat significant, sees it trading at $181.65, which records a 20-day low.
The last time Litecoin saw a drop in value of this magnitude was on February 14, where it dropped to a mind-boggling $159.58.
Since then, it had not dropped below $184.07, a value which was recorded on February 23, 5 days after the Litecoin Cash fork went into effect.
Where could this all lead?
Market conditions point that this could cause the same effect as the rumored ban on cryptocurrencies by South Korea had had in January 2018. The effects were so significant back then because South Korea is one of the central hubs of the world when it comes to cryptocurrency trading, holding some of the largest exchanges in the world.
At the time, billions of dollars had been lost in market cap and that had only begun stabilizing after South Korea decided to not put a ban on cryptocurrencies, but only regulate them.
With the U.S. market now under a similar sense of ambiguity, this could cause trouble for cryptocurrency market cap again. It remains to be seen how the events unfold and how soon can the cryptocurrencies start stabilizing again.Follow us on Social Media: