Meanwhile, the US financial markets have closed again. We look at the live Bitcoin price and the prices of the top 25 crypto. The price drops can be explained by the fact that the US regulators SEC and CFTC simultaneously took crypto under fire. We look at what is happening and why the market is reacting negatively to this.
We begin, of course, with the live Bitcoin price and the prices of the top 25 crypto.
Live Bitcoin price and prices top 25 crypto drop
At the time of writing, the live Bitcoin price is quoting EUR 27,812.96 ($28,960.25). This is 4.52% lower than during our Bitcoin update yesterday.
The other crypto in the top 25 are also recording losses, some even in double digits. The biggest tick is currently at -11.15% for Polkadot (DOT). On the site of Tradeincrypto.com you can view all live crypto prices 24 hours a day.
Sometimes it’s not immediately clear what causes a price drop in crypto, but today we don’t seem to have to look far. The US financial regulators SEC (for securities) and CFTC (for commodities) both opened the attack on Bitcoin and crypto. We list what happened.
SEC chairman Gensler: crypto treated as security in new law
The crypto community believes that crypto should not be seen as security. This is mainly because of strict requirements for an IPO as security and the high costs involved. The lawsuit between the SEC and Ripple (XRP), which centers on the question of whether the SEC may treat Ripple as security, is therefore being followed with suspicion.
At the same time, new crypto legislation is coming to America. Here too the crypto community wants crypto to be treated not as security but as a commodity (with a lighter regime and supervision by the CFTC). SEC chairman Gensler, however, made a US House committee statement that gives short shrift to this wish. His entire statement can be read here.
The bottom line is that most crypto will be considered security under the new law. There will also be no “eased” regime. So crypto currencies will have to comply with the same regulations as other investments. The SEC will also get the same tools for enforcement. In addition, he indicates that the SEC will pay extra attention to the volatile nature of the coins and protection of the public.
Pseudonymity under pressure and capacity doubled
Furthermore, Gensler additionally stated that the rules regarding the declaration of property to the SEC will also apply to crypto. With this, he is mainly focusing on getting crypto exposure of family businesses and private investors to be transparent. In order to do this, the SEC is doubling the department that deals with this by hiring 20 researchers and lawyers. Gensler suspects that this is too little and wants more budget for further expansion.
CFTC also sets sights on crypto
The CFTC is also setting its sights on crypto. Chairman Rostin Behnam spoke digitally at a conference. There, he indicated that some 50 crypto-related complaints have now been processed since 2015.
Half of these complaints are fraud-related. Also, the number of complaints per year is increasing rapidly. Therefore, he insists that the new law also gives the CFTC more ability to enforce against crypto. Also, the CFTC will invest more in manpower and resources to tackle crypto fraud.
Why is the crypto market reacting negatively to regulation and enforcement?
So now that it looks like crypto is going to fall under a tough regime and moreover be closely monitored to prevent fraud and protect investors in America crypto investors are reacting negatively. This seems strange at first glance, after all, clear rules and a safe trading environment should be taken positively, right?
True, but people are mostly concerned about lack of clarity. The SEC’s current regulations are primarily focused on traditional equity markets. This makes it much more difficult for crypto currencies (for example, due to their decentralized nature) to comply with those requirements.
In addition, the fact that the SEC has started a lawsuit against Ripple (XRP) where fines and prosecution are demanded is cause for concern for investors. One wonders how the SEC is going to react towards other crypto currencies since they are not now reported as security. If the SEC starts prosecuting each coin it will obviously affect the reliability and valuation of the coins.
Furthermore, the SEC’s requirements, such as for example the obligation to disclose holdings, run counter to principles of crypto generally, even though the SEC maintains confidentiality to the outside world. Investors and insiders fear that regulation will stifle innovation. The level of cost of an SEC approval process also plays a role.
Finally, there are concerns about (the lack of) knowledge among authorities. Doesn’t their eagerness to investigate and fear of volatility lead to excessive investigative measures? Incidentally, people expect that good regulation will ultimately benefit the market. After all, many parties who currently doubt the reputation of crypto will soon be able to trade safely. Ultimately, therefore, one expects sentiment to turn positive once regulators have filled in the uncertainties.
Want to stay up to date on the latest price developments?
You can always follow the developments yourself with our WANT crypto analyses or the background articles and previews on the crypto market and Bitcoin. Of course, you can also follow the live quotes 24 hours a day if you want to stay informed in real time. Are you interested in other investments besides crypto? Then our weekly Monday morning price forecast might be a reading tip. “Please note: We never give financial advice, so our contributions can’t be interpreted that way either. Always do your own research and decide on rational grounds if, when, what and how much you want to invest in.”