Cardano is in danger of being heavily regulated. How could this affect the price of ADA?
Ripple’s legal dispute with the SEC ensures that the price of XRP has never risen as strongly as it did in 2018. More recently, the SEC also imposed sanctions on a cryptocurrency exchange like Coinbase. Now Cardano could also come under fire from the US Securities and Exchange Commission.
The US Securities and Exchange Commission is responsible for regulating securities trading in the US. For a long time, cryptocurrency trading was poorly regulated. Many of the early investors were able to benefit from massive gains, but others also lost a lot of money. In the last 2-3 years, what is probably the most important regulatory authority in the world has been taking more intense action against cryptocurrencies.
The focus is mainly on the XRP coin. It is issued centrally by Ripple Labs and can be used for payment transactions between banks. Since Ripple centrally issues and manages this coin, there was the highest suspicion from the beginning that it was a security.
Securities in US trading are subject to precise regulations that Ripple has not adhered to so far. This is the subject of a lawsuit that has been in a limbo for over 2 years.
Will the SEC Take Action Against Cardano Soon?
A guilty verdict against Ripple could change a lot in the crypto market. Suddenly, other altcoins would be suspected of counting as securities as well. In principle, this is already the case, and the SEC is showing with tough measures, including against Coinbase, how serious they are about regulating cryptocurrencies.
Cardano could also be affected. The network is considered one of the biggest hopes in the crypto market. The recent crackdown on the SEC, however, has made many investors sit up and take notice. Venture capitalist Dan Gambardello says Cardano or its ADA token is not under SEC jurisdiction, as the ICO took place in Japan.
According to Gambardello, ADA is likely not considered a security. 2 simple reasons. First, Cardano ICO was in Japan, not available to US investors. Second, a judge recently ruled in the LBRY case that the secondary sales of $LBC tokens were not securities, which sets an important precedent for things like $ADA.
Can the SEC Implode the Cardano Course?
Tighter regulation of cryptocurrencies, at least altcoins, seems inevitable. Therefore, the networks and also the investors have to adapt to it. Despite its ICO in Japan, Cardano is also threatened with stricter regulation by the SEC, which would mainly affect trade in the United States.
Cardano’s course could suffer with the corresponding news. However, the regulation should not cause serious damage to Cardano’s course. The project has too many enthusiastic fans and is too long-term for that. Still, watch out for the SEC’s next steps.
By Audy Castaneda
