Altcoins Affected by Lawsuits Against Binance and Coinbase
A slew of altcoins, making up over 50 cryptocurrencies worth over $100 billion, have seen their prices drop following the recent lawsuits filed by U.S. regulators against exchanges Binance and Coinbase. These cryptocurrencies, which make up about 10% of the overall market, are now viewed as securities by the SEC watchdog, according to CCData. Major players like solana, polygon, and cardano have experienced declines between 23% and 32%.
Impact of Security Classifications on Exchanges
Vetle Lunde, senior analyst at K33 Research, noted that the security classifications would affect all U.S. crypto exchanges and could lead to a forced closing of various altcoin pairs. Although it is uncertain whether U.S. courts will accept the SEC’s classification, the impacts are already being felt, with Robinhood Markets planning to remove solana, cardano, and polygon from its platform. These classifications also pose potential challenges for exchanges to implement, as securities can only be traded by brokers on regulated exchanges.
Investment Interest in Blockchain Projects Hindered
The SEC’s classification could drastically impact investment interest in blockchains underlying tokens like solana and cardano, both notable chains for developing decentralized finance and other applications. Despite disagreeing with the SEC’s classification, the Cardano Foundation and Solana Foundation stated they look forward to working with regulators to gain further clarity.
Quiet on the Bitcoin Front
The SEC’s lawsuit did not name bitcoin and ether, nor stablecoins such as tether and USC Coin. Despite some jitteriness among investors, the market seems to be holding steady for these top cryptocurrencies. Long-term bitcoin holders appear to be sitting tight, with short-term traders being most active in last week’s trading.
It’s not all bad news for altcoins, as some market watchers believe their price declines could attract value-seeking investors. Investment products tracking altcoins have seen small net inflows in contrast to bitcoin and ether, according to Coinshares data.