Cryptos crumble as US talks regulationBy Arnaud Masset
Crypto currency valuations crashed by $420 billion on Wednesday, as America’s Securities and Exchange Commission and Commodity Futures Trading Commission considered classifying Ether (ETH) and other cryptocurrencies as securities. Their deliberation is expected to last several weeks: its outcome has massive implications not just for ETH but for the myriad of ERC-20 tokens that use Ethereum blockchain. If Ether is a security, regulations for stocks and bonds will apply to the cryptocurrency, investor-protection laws will kick in, and exchanges trading ETH would need an SEC license.
How will the SEC and CFTC decide? Rumours for and against abound. Some say ETH and its ilk pass the Howey text, some say no. Some say regulators will they wipe the slate clean and build a new legal framework for cryptocurrencies. The US has prospered mightily from creation of the Internet: remember, before there was Crypto Valley, there was Silicon Valley! Therefore we believe that excessive regulation would slow growth and send cryptos outside the USA.
Bitcoin holders can breathe easy on this. The largest cryptocurrency by market capitalisation already is classified by the CFTC as a commodity.