Ethereum prices took a serious hit today, after news about the possibility of regulators considering if it should be treated like securities emerged.
According to CNBC, both U.S. commodities and securities watchdogs are investigating if the same rules for stocks should apply to several digital currencies, ETH included. As you probably know, until now, cryptocurrencies have not been drawn into crackdowns by the Securities and Exchange Commission.
Some organizations are already considering it a security. And this is good!
The same source reveals that the creation of Ethereum, back in 2014, is considered – probably – “an illegal securities sale”, at least for some regulators. Right now, the currency has a market cap of around $67 billion and it’s trading for roughly $676 per token, at the time of the writing.
The analysis is based on various factors, but it mainly focuses on whether the creators of various virtual currencies, other than Bitcoin, can have any or complete control over their value. Basically, this can be compared to how one company’s manager can influence its stock value based both strategy and investments.
Until now, there are two federal regulatory agencies which came up with different definitions to exactly what a cryptocurrency is. Specifically, we’re talking about the Commodity Futures Trading Commission, which has labeled Bitcoin, Ethereum and others as commodities. Basically, this means that they’re exempt from SEC regulation.
The prices could skyrocket soon enough!
On the other side, the SEC has indicated that cryptocurrencies are securities. Two months ago, the agency revealed that it’s looking forward to applying security laws to everything, including digital wallets. Obviously, if this remains the main definition, it could influence the price of a lot of coins, Ethereum included, in a very positive way.
As a side note, back in July 2014, the Ethereum foundation managed to raise more than 31,000 bitcoin, which, at the time, was worth $18.3 million. This was also the period when the first 60 million ether were sold. A lot of investors believed that the launch would automatically result in a rise in asset value, so the deal looked a lot like a security.