Yesterday, the price of Ethereum (ETH), the most important crypto after Bitcoin (BTC), decreased by more than 7%. There are mostly two reasons for that:
- The bankrupt of Silvergate and potentially some other banks like Silicon Valley bank;
- The comments of New York General Attorney considering ETH a security in KuCoin case, which means for some traders there is a risk that the SEC also considers ETH a security.
As the first reason concerns all the market even beyond crypto, we will focus on the second one.
What would it change outside the US if ETH was considered a security by the SEC?
If Ethereum (ETH) was considered a security by the Securities and Exchange Commission (SEC), it could have significant implications for the crypto market outside of the US:
Increased regulatory scrutiny: If ETH is considered a security, it could set a precedent for other cryptos to also be regulated as securities. This could lead to increased regulatory scrutiny and oversight of the crypto market in general, not just in the US but also in other countries.
Impact on ETH price: If the SEC considers ETH a security, it could affect its price in the short term, as investors may become more cautious and sell their holdings. However, in the long run, it could lead to increased legitimacy and adoption of ETH as a regulated financial asset.
Ripple effect on other cryptos: The SEC's decision on ETH could also have a ripple effect on other cryptos that are similar in nature. This could lead to more regulatory clarity for other cryptos and help to distinguish between those that are securities and those that are not.
Impact on blockchain technology: ETH is a major player in the blockchain space, and if it is considered a security, it could have implications for the development and adoption of blockchain technology. However, the impact may be limited as there are other blockchain projects that are not considered securities and could continue to develop and innovate.
Which blockchain projects are not considered securities?
Some examples of blockchain projects that are generally considered to be not securities include:
- Bitcoin (BTC): As the first and most well-known crypto, Bitcoin is generally considered to be a commodity rather than a security.
- Filecoin (FIL): Filecoin is a blockchain project that aims to create a decentralized file storage system. It is generally considered to be a utility token rather than a security.
ChainLink (LINK): Chainlink is a decentralized oracle network that aims to provide reliable and secure data feeds for smart contracts. It is generally considered to be a utility token rather than a security.
The examples above are not exhaustive, and it does not mean these tokens have more potential than other ones. Furthermore, if ETH crashed next week, which is quite unlikely, the other cryptos would crash too...
Disclaimer: this article does not contain any financial advice. The information is provided for general informational and educational purposes only.
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