The Securities and Exchange Commission (SEC) recently sent shockwaves through the cryptocurrency community. In a stunning move, it flagged over 50 cryptocurrencies as being securities, a designation that renders these projects illegal and in breach of US regulations. Let’s dissect three of the most high-profile names on this notorious list and explain why you should steer clear away from security tokens.
1. Polygon: The High-Tech Gamble That’s Losing Its Luster
Polygon (MATIC) has made a name for itself by offering a scalable and interoperable blockchain platform. However, this ambitious project has recently been deemed a security by the SEC, casting a long shadow over its potential. Over the past week, MATIC prices have plummeted by more than 30%, a sign that investors are becoming increasingly wary of the regulatory risks.
While Polygon’s technology may be attractive, the regulatory concerns make it a risky proposition. With this ruling, the SEC has essentially said that MATIC, regardless of its technical merits, is operating outside the boundaries of US law. Until Polygon finds a way to operate within these regulations, it’s likely best to steer clear of this investment.
2. Cardano: An Innovative Vision Under Regulatory Fire
Cardano (ADA) is another promising project that has recently come under the SEC’s scrutiny. Designed as a decentralized platform that runs financial applications, Cardano has been a favorite among crypto enthusiasts due to its unique layered architecture and its use of formal verification for security.
However, the SEC has now declared ADA a security, resulting in prices tanking by over 28% in the last week alone. The question of legality puts Cardano’s future at risk, overshadowing its unique approach and technical superiority. Investing in ADA under these circumstances could be a risky gamble that investors might want to avoid until the legal landscape becomes clearer.
3. Binance Coin: Big Name, Bigger Problems
Binance Coin (BNB), the native cryptocurrency of the Binance Exchange, is the third major crypto on our list. BNB has a wide range of uses within the Binance ecosystem, from paying for transaction fees to participating in token sales. However, the very success of Binance has seemingly placed it directly in the SEC’s crosshairs.
BNB has been hit hard, with prices plunging by more than 22% since last week. This drastic fall in price was accompanied by a lawsuit filed by the SEC against Binance US, causing it to suspend withdrawals and deposits in USD. The combined impact of legal action and potential penalties could cripple Binance and its native token BNB. As things stand, the risks associated with BNB appear to far outweigh the benefits.
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