Many top alts are down 10-15% as the market continues to move backwards as bitcoin dominance continues to climb, now at 58% on a total market cap of $186 billion. Ethereum has slumped to $173, a fall of 9.5%.
If you didn’t know it already, bitcoin has emerged as crypto’s safe haven port as it continues to suck the air out of the altcoin world.
A trader selling out of alts on an exchange is going to be buying BTC on the other side of the trade, assuming it is a non-fiat trading venue. This effect also helps to explain how it is that BTC is only down 0.5% at time of writing to $6,283, with other leading projects are off 10% or more.
FINRA, SEC getting busy
The regulators have been in the US where a umber of case came to light yesterday. This should be welcomed by the crypto community. More regulation is a good thing.
Perhaps the most consequential case was in the Eastern District of New York: United States v. Maksim Zaslavskiy., in which the judge ruled that securities law did apply. The ICOs concerned were REcoin and DRC. The promotor claimed that the coins were back by collateral, real estate and diamonds respectively.
In other developments FINRA issued a disciplinary notice to HempCoin, charging it with “unlawful distribution of a unregistered cryptocurrency securities”.
And if that was not if, the Securities and Exchange Commission (SEC) charged two ICO firms in separate cases: Crypto Asset Management was charged with fraud and operating an unregistered investment company
and TokenLot with operating an unregistered broker-dealer. Those cases were settled before coming to court.
The flurry of legal activity tells us three things: The US regulators will determine that most ICOs are selling securities and that regulation is coming soon as the SEC and others ramp up surveillance and policing actions. The third, as lawyer Jake Chervinsky points out, the TokenLot case was the first time the SEC has gone after a company simply for not registering. There’s no suggestion any fraud was committed on TokenLot’s part. His conclusion is that the whole industry – not just the crooks – are under the spotlight:
“The SEC is no longer focusing exclusively on obvious ponzis & scammers. They’ve expanded their scope to people who, despite good intentions, fail to comply with the securities laws due to negligence alone.”
He concludes in his twitter thread: “…today feels like a big step forward in the government’s efforts to clean up crypto. The pace is picking up & I expect we’ll start seeing announcements like these more often.”
Stablecoins just keep coming
Not to be confused with TokeLot, TokenSoft, which helps startups to navigate the legal and regulatory minefield such as it is, has said that it will now also support projects running on the Stellar Lumens public blockchain. That’s good news for Stellar, which has been the subject of much positive news flow recently, particularly the news that IBM is launching a stablecoin on its rails.
Brainchild of the Winklevoss twins, stablecoin Gemini Dollar has just been given regulatory approval by the New York Department of Financial Services and is backed 1:1 with US dollars.
The leading stablecoin in the marketplace is Tether, and it has attracted a lot of controversy around doubts on the level of dollar backing acting as collateral. Some have said its relationship with Bitfinex has allowed it to effectively print free money by issuing more Tether that may not be fully backed.
In other news, OKCoin founder Star Zu has had a run in with the authorities in China, where he was brought in for questioning after customers complained that the exchange had been manipulating bitcoin futures. He has now been released.
Academic Barry Eichengreen, professor of economics at the University of California, Berkley, thinks stablecoins of whatever design are deeply flawed. One of his main arguments is that it is not a scalable model. Assuming adoption grew for a dollar-pegged stablecoin – as it grew so too would the dollar reserves of a 1:1 backed coin. Having to hoard those dollars as collateral is a burdensome cost.
Bottomline is stablecoins won’t make crypto more stable is his Eichengreen’s take.