Crypto Regulation May Cost Us the Small Coins

Securities at the mercy of a unified SEC front

2022 was a rough year for crypto with more than $1.3 trillion wiped off the value of the market. With a Bitcoin price slump of more than 60%, those who made predictions about Bitcoin’s price in the past year really missed the mark. And with 2023 now here and widespread crypto regulation more plausible than ever, we could be in for another volatile year.

Confident Bitcoin Predictions:

Opinions for the fate of Bitcoin have varied somewhat, but generally the conversation whispers of a surge in price over the coming years.

A recent popularized prediction comes from cryptocurrency analyst, Dave the Wave. Based on his logarithmic growth curve (LGC), he predicts that Bitcoin could ascend to $160,000 by January 2025. The LGC model continues to track Bitcoin’s price action despite the gloom and doom surrounding the crypto markets, he noted.

Another interesting take comes from American entrepreneur, Robert Kiyosaki. He cautions that new U.S. Securities and Exchange Commission (SEC) regulations are likely to crush most crypto tokens, thus driving buyers to Bitcoin. The reason being that Bitcoin is seen as a commodity while most other crypto tokens are just securities. 

So, what exactly will happen to small coins?

There’s a lot of debate over whether specific crypto assets should be considered securities, and in the U.S., regulators have not reached a full consensus. With the multi-billion dollar crypto market growing, investors have been waiting to see how various financial regulatory agencies will regulate it. 

Under the Responsible Financial Innovation Act, introduced in the United States Senate this past June, most altcoins are likely to be considered securities while Bitcoin and Ether have been confirmed classified as commodities. Most altcoins then would likely be regulated as securities, which would require crypto projects to engage in disclosure.

We should note that the SEC’s approach to crypto hasn’t always been well-coordinated or even consistent. Notably, in years past effort has been taken against the spate of unregistered Initial Coin Offerings, but more broad attempts to regulate crypto have fallen short. 

It’s not a coincidence that the collapse of FTX has accelerated calls for stronger adherence to existing crypto regulation. SEC Chair, Gary Gensler, warned “The runway is getting shorter”, alluding to the agency’s patience is wearing thin for digital-asset exchanges and other firms that neglect its regulations. With this breakthrough in regulatory clarity for the cryptocurrency industry in 2023 globally and in the U.S., this might just be Bitcoin’s comeback year after all. 

 

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