- The Ripple decision is seen as a precedent for cryptocurrency regulation
- Bitcoin hits 1-year high
- Binance is reportedly laying off more than 1,000 employees
SINGAPORE/WASHINGTON, July 14 (Portal) – Bitcoin hovered near its year-to-date high on Friday after crypto investors were encouraged by a legal victory that saw cryptocurrency XRP declassified as a non-security.
A US judge said Thursday that Ripple Labs Inc. did not violate securities laws by selling its XRP token on public exchanges.
The case marks the first win by a cryptocurrency company in a lawsuit brought by the U.S. Securities and Exchange Commission. Although the decision was specific to the case, it sparked a wave of optimism among crypto investors that cryptocurrencies may not outperform equities could apply.
Still, enthusiasm for some has been dampened by a Wall Street Journal report that Binance, the world’s largest cryptocurrency exchange, has laid off more than 1,000 people in recent weeks. The layoffs are ongoing and could result in the exchange losing more than a third of its staff, the report said, citing a person familiar with the matter.
Coinbase also announced on Friday that it would limit its retail crypto staking services in California, New Jersey, South Carolina and Wisconsin pending several states filing lawsuits against the exchange last month alleging the program violated securities laws .
Previously, bitcoin hit its highest price since June 2022, hitting $31,818 before falling to around $30,091 at 2009 GMT on Friday.
Second-largest token Ether had its best session since March on Thursday, and XRP, which the US judge ruled legal to sell on public crypto exchanges, surged 73% on Thursday and held most of those gains on Friday.
“The regulatory environment is changing,” said Matthew Dibb, chief investment officer at crypto asset manager Astronaut Capital. “And from what we’ve seen over the past 24 hours, things may be going for the better.”
Justin d’Anethan, head of business development in Asia at Keyrock, a digital asset market maker in Hong Kong, said that the finding that XRP tokens sold on public crypto exchanges are not securities within the meaning of the law “is likely to set a precedent “.
“Ripple stakeholders were waiting for some regulatory clarity. Yesterday the court appeared to have delivered just that,” he said.
Following the decision, several major cryptocurrency exchanges, including Coinbase (COIN.O) and Bitstamp, resumed trading in XRP on their platforms after suspending trading in the token in 2021 due to the SEC lawsuit. Binance.US announced on Friday that it had also enabled XRP trading on its exchange.
Coinbase, which was sued by the SEC last month for alleged securities law violations, saw its shares rise nearly 25% on Thursday as investors hoped the ruling in the Ripple case would bode well for Coinbase.
SLOW RECOVERY
Cryptocurrencies have seen a gradual recovery so far this year after prices fell sharply over the past year and a series of bankruptcies at major crypto firms, including crypto exchange FTX, left investors with heavy losses.
The collapse of FTX intensified global regulatory efforts to contain the sector, particularly to protect retail investors lured by quick returns.
China has all but banned crypto. US investigators investigating FTX have accused founder Sam Bankman-Fried of multi-billion dollar fraud to which he has pleaded not guilty.
Alex Mashinsky, the founder of bankrupt crypto lender Celsius, has been charged with fraud for misleading customers and artificially inflating the value of the company’s token, according to a U.S. indictment unsealed Thursday. He pleaded not guilty.
Meanwhile, Coinbase and its larger rival Binance are facing lawsuits from the SEC and, in Binance’s case, other regulators challenging them.
A senior SEC official said last month the industry has “an ethos based on non-compliance.”
Binance’s layoffs, The Wall Street Journal reports, come as a number of executives recently left the company, including Chief Strategy Officer Patrick Hillman. Hillmann confirmed on Twitter that he was leaving the exchange, citing personal reasons.
Nonetheless, crypto investors have been encouraged by the world’s largest asset manager BlackRock (BLK.N), which applied to launch a Bitcoin exchange-traded fund last month. In early July, exchange operator Cboe (CBOE.Z) updated its application for a similar fund to be managed by asset manager Fidelity.
As a risk asset, cryptocurrencies could also benefit from a weaker dollar.
“We’ve been going through this long period of consistently negative news to make the space look pretty bleak,” said Chris Weston, head of research at Melbourne brokerage house Pepperstone.
“For the first time in a long time there is consistently positive news and that means you have momentum.”
Additional reporting by Vidya Ranganathan in Singapore; Edited by Simon Cameron-Moore, Alex Richardson and Josie Kao
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