Bitcoin remains one of the biggest and most important cryptocurrencies in the market. And whenever people see that the market is falling, they are quick to look at Bitcoin to see how it will react.
In fact, it is not an exaggeration to say that many cryptocurrencies also depend on Bitcoin, as their price fluctuates depending on how well it is doing. As a result of most individuals depending on it, there is a real issue when it comes to its prices falling.
And with the latest downward wave, many are looking at the SEC for how prices continue to drop as regulations continue to tighten throughout the US. The SEC has taken on two major players in the crypto market recently. These include Ripple and Kraken.
While in one instance, the SEC was unable to silence the crypto provider for the services they provide, in the other instance, they did. Kraken was forced to shut down its staking service, along with having to pay a $30 million fine.
That alone made it very difficult for all of these companies to decide how they should move forward. Many companies continue to consider the option of taking their operations out of the country.
How the Ruling Affected the Other Companies
Kraken having to shut down its services and taking such a big hit was a shock to the rest of the industry since they all had to make sure that they were not getting on the SEC’s bad side.
It was also the sheer size of Kraken that really intimidated many companies since it was the third-largest exchange in the market according to volume. So if they could get to a company like that, then the smaller companies do not stand a chance.
According to the reports that the SEC published, they were saying that the company had failed to disclose its services and provide proper safeguards to investors in case something happened.
But while some in the industry happened to be intimidated by this show of brute force, others were not. Instead, companies like Coinbase simply said that this did not affect their service or their program in any way and that they were following through on their plans.
Coinbase is also looking to implement a staking-as-a-service platform, but they will just be careful to properly register it to ensure that there are no issues in the long run.
Why Kraken Failed
The only major reason why Kraken happened to fail is that it did not properly categorize the type of product that it was offering. While many thought that what they had to offer was a service, it was actually a yield product.
On the other hand, a service like the one that Coinbase is looking to offer all of its traders has based on rewards and commissions that the company discloses. Therefore, they are completely safe from the regulatory arm of the SEC.
The Effect On Crypto Markets
The only real issue that the current bitcoin market is facing is that following the settlement of Kraken, investor sentiment was hurt. Therefore, there were plenty of people who cashed out their chips and left.
While Bitcoin took on the brunt of most of the losses, it still managed to cause ripples throughout the crypto market. The price for the biggest cryptocurrency in the market managed to drop down to a three-week low of $21,650.
On the other hand, Ethereum also dropped in price to $1,526, despite trading as high as $1,630 just a day earlier. Various other cryptocurrencies also saw their stock drop significantly, which really showed how much damage a single decision can do.
When the SEC tried to make an example out of a crypto company, it succeeded with Kraken. As a result, it managed to create ripples throughout the market. The significant impact of such a decision was that all companies now have to walk on eggshells.
