crypto is nuts. again.
the past month and a half saw Bitcoin’s price rise from the sub-$30,000 lows of end-July to nearly $53,000 in early September. then came d-day, September 7, when Bitcoin officially became legal tender for the first time, in El Salvador. a messy rollout saw the price crash to ~$43,000 but quickly recover to ~$49,000. now it’s on the descent again, briefly dipping below $40,000 on September 22.
such wild swings aren’t new or a cause for concern to seasoned crypto hands. but the reasons behind the latest dip might be.
the trouble began when Coinbase, the only publicly listed cryptocurrency company, announced plans for a lending product. the feature, called Lend, would allow users to earn interest by pledging their tokens. they would be used by Coinbase to disburse loans and earn interest, pretty much like a bank.
the US SEC, however, saw it as anything but. It issued a notice threatening action for offering unregistered securities. In response, Coinbase initially stood its ground, with its CEO tweeting about the SEC’s “sketchy behaviour”. but it finally gave in last week and dropped its plans for Lend. its stock promptly tanked 6%.
meanwhile, another cryptocurrency exchange, Binance, announced on Tuesday that it would shut down its futures, options, and leveraged products in Australia in December. this was a further concession to local regulators after having stopped Australian clients from opening new accounts for the features last month.
Binance has been on a run of regulatory concessions across the globe. it has either been banned from or acceded to dictated terms in the UK, Singapore, Canada, Japan, and Germany (eventually all of Europe). it’s also under investigation in the US for alleged insider trading.
meanwhile in India, the government has reportedly formed yet another panel to examine the scope of taxing cryptocurrencies. the panel is supposedly mandated to submit its report in four weeks, which may lead to a cryptocurrency bill being tabled in the winter session of Parliament.
overall, regulators and cryptocurrency powers are thrashing out the do’s and don’ts of this neo-industry. the back-and-forth is bound to cause turbulence in the short term, but clear rules will only help the industry gain further validation and provide stability in the long run.