In a recent video, Nicholas Merton from Data Dash discussed the latest developments around Binance, Coinbase, and the SEC. He questioned whether the charges being pressed against these companies could potentially propagate a further bear market.
SEC Charges Against Binance and Coinbase
The SEC has dropped 13 charges on both Binance and its founder, CZ. The charges mainly focus on two key elements. The first is that Binance US, a U.S. subsidiary for Binance, was essentially listing a variety of securities. The second is that Binance was offering trading services to select power users or high-level individuals in the United States through its original Binance.com exchange.
Coinbase is also being accused of operating as a securities exchange without holding a securities license in the United States. The SEC alleges that products like earning interest on stable coins are securities, and has labeled up to 67 cryptocurrencies as such.
The Impact of SEC’s Definition of Tokens as Securities
Merton discussed the potential impact of the SEC’s definition of tokens as securities and the possibility of charging companies in the crypto industry. He expressed concern about the negative effects this could have on the industry and the need to focus on the positive aspects, such as the resilience of exchanges like Binance.
Despite the ongoing legal battles and regulatory issues faced by cryptocurrency exchanges such as Coinbase and Binance, Merton believes these exchanges are likely to continue operating and engaging in combat in court.
Criticism of the SEC
Merton criticized the US enforcement agency for going after Coinbase and Binance, accusing them of weak enforcement and inadequate protection of investors. He also highlighted the lack of a framework to determine which projects are doing things right and which are not, and suggested that crypto will always exist to some degree.
The State of the Crypto Industry
Merton acknowledged that many projects in the crypto space raised large sums of money without generating revenue or demand for their tokens, and he thinks this is an immature way to operate in an emerging industry. He argued that dumping or slowly distributing tokens to unsuspecting buyers is not a viable solution to make billions of dollars.
The crypto industry has produced little to no value beyond Bitcoin, and regulators need to step in. All coins are in a bad position, and liquidity flows will likely remain strong as people unload their all-coin positions back into Bitcoin.
The Future of the Crypto Market
Merton believes that the removal of fraudulent ICOs will lead to a decrease in liquidity and concern among investors. He also noted that the contraction in all coins is not solely due to regulators, but also because of the lack of successful altcoin projects.
He suggested that investors should focus on established coins like Bitcoin and Ethereum, while also having exposure to other coins that have potential for long-term success. He also mentioned the impact of regulators and ongoing litigation on the cryptocurrency market, and suggested that some projects may be grandfathered in to some degree.
Merton emphasized the need for caution in the current market, as the next few years may be more difficult than previous bear markets. He suggested that there may be a long way to go in terms of percentage declines.
In conclusion, Merton offered an honest perspective on the current state of the crypto market, highlighting the challenges faced by major exchanges like Binance and Coinbase due to SEC charges. He also discussed the potential impact of these charges on the crypto market and the need for better regulatory frameworks. Despite these challenges, Merton remains optimistic about the resilience of the crypto industry and the potential for long-term success of established coins like Bitcoin and Ethereum.