What happened
There weren't a lot of positive moves in the crypto industry over the past week. The U.S. Securities and Exchange Commission (SEC) has gone all out on crypto, fining exchange Kraken $30 million and shutting down its staking program in the United States. Some of the biggest impacts were felt by smaller tokens and businesses that may not have the resources to fight the SEC.
According to data from S&P Global Market Intelligence, the value of Radix (CRYPTO: XRD) plunged 25.3% in the past week and Fantom (CRYPTO: FTM) has dropped 28.8%, but NEO (CRYPTO: NEO) was up as much as 11.2% and is currently up 1.6% on the week. There may be a good reason for these different reactions.
So what
I'll start with the SEC's move, which is not entirely clear at the moment. What we know is that the SEC has shut down Kraken's Ethereum (CRYPTO: ETH) staking program, and it could go after others. Reports indicate that the SEC is trying to keep traditional finance institutions, like banks, from even interacting with crypto exchanges, which could isolate the industry.
Radix is built to be a finance-based blockchain with stablecoins, lending, options, and even insurance. It's not clear what the SEC's impact will be, but if they're cracking down on staking, it's possible these products are next.
Fantom is another blockchain that's built to offer yield and decentralized finance products that the SEC may be frowning upon.
The interesting one is Neo, which has a token for utility and a token for gas, or paying for transactions on the blockchain. This could give the cryptocurrency more ways around the current staking crackdown, which wouldn't affect all tokens.
What we know for sure is that the U.S. is taking a much harder stance on crypto than ever before.
Now what
I wouldn't read too much into these crypto moves this week. Almost everything is down because of the uncertainty the SEC has brought to the market. But this is aglobal market and there has already been pushback from within the SEC and the halls of Congress.
Ironically, the SEC's actions against a big crypto exchange that's functioned well during this volatile market is effectively making the bull case for crypto in general. The blockchain was built to be free from government interference and control.
It's not clear how this ends, but one possibility is more rapid crypto legislation. There have already been bills proposed in Congress that would define what a security is and how crypto companies and exchanges need to act, which would allow the industry to emerge from the shadows of a legal grey area. That may be forced on the market now.
This will be something to watch closely, but a week does not make the case for or against cryptocurrencies. Especially with these altcoins, technology improvements and user and developer adoption are key. Those didn't change this week, but more people are needed on the blockchain if value is going to move higher in the long term.
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Travis Hoium has positions in Ethereum. The Motley Fool has positions in and recommends Ethereum. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
