Change in How You Buy or Sell Ethereum
There would be even more stringent regulations on how to purchase and sell Ethereum if it were categorized as a security.CoinDesk was informed by one cryptocurrency lawyer that it would be "devastating" for investors in the United States. Centralized Bitcoin exchanges, for instance, are not SEC-registered. Ethereum, which makes up about 20% of the cryptocurrency market, might have to be delisted.
Furthermore, the implications for other cryptocurrency projects and NFT marketplaces that rely on the Ethereum blockchain are unclear. They pay for gas and other expenses with ETH. It's difficult to comprehend paying gas fees with registered security. That is not how securities are designed to operate. Consider owning Apple stock and attempting to pay a bank fee or purchase coffee with a portion of it.
What Investors Can Do
Be ready for both immediate and long-term repercussions if the SEC chooses to file a complaint against Ethereum.
Think about how the regulatory concerns relate to your long-term investing thesis for ETH if you are a buy-and-hold investor. In addition to making it a riskier investment, legislative changes may have an impact on how the Ethereum blockchain operates.
Consider storage if you wish to keep your Ethereum regardless of any SEC actions. In the worst situation, trading ETH can be prohibited by your broker or cryptocurrency exchange. How are you going to handle that? For instance, check sure your cryptocurrency wallet is configured and functional before transferring your Ethereum to it.
Spot Ethereum ETFs Look Less Likely
The recent news has the more direct effect of decreasing the likelihood that a spot Ethereum ETF would be approved. The recent approval of multiple spot Bitcoin ETFs by the SEC led to a surge of institutional capital and a record high for BTC. The likelihood of a similar Ethereum ETF being approved is rapidly diminishing.
Regulators have previously shaken the security stick at Ethereum. Although doubtful, it is still possible that it will act further. As far as we know, the regulator is inquiring regarding the foundation's operations. That is a long way off from filing charges, and much farther away from any court decision that might not be made for years. The most important lesson for investors is that Bitcoin is a riskier investment due to regulatory uncertainty.
Remember that nations like China have essentially outlawed cryptocurrency. Have a plan and keep your ears to the ground so you can respond quickly to any developments.
