Why Ether and Ripple -But Not Bitcoin -Prices Might Come Under Pressure Soon

Story by: Jordan French

Though Bitcoin has received the most attention, the introduction of a multitude of other cryptocurrencies has also sparked the interest of global investors — especially since many of these seem to be appreciating at a much faster rate.

This has even led some to view Bitcoin as a “store of value” similar to gold because it is more stable than other cryptocurrencies, and there is only a limited supply of the cryptocurrency that can be distributed. Most estimates assume that the last “new” Bitcoin will be mined around 2140.

As Bitcoin’s market price has begun to rise once again, so has continuing interest in other cryptocurrencies. But when it comes to options such as Ether and Ripple, recent events indicate that their prices could soon come under pressure in ways that Bitcoin investors won’t experience.

Here’s a closer look at why investors might want to think twice before choosing these alternative crypto investments.

‘Noncompliant securities’

Ripple and Ether experienced a major blow this week as Gary Gensler, a former financial regulator for President Obama, spoke out regarding the regulatory status of Ether and Ripple. In an interview with the New York Times, he said, “there is a strong case for both of them — but particularly Ripple — that they are noncompliant securities.”

The main problem, which affects many other cryptocurrencies as well, is that the tokens were first offered via Initial Coin Offerings (ICOs), a term used to describe crowdfunding a blockchain technology or company. The fact that tokens were sold before their networks were even fully functional further complicates the issue.

According to Gensler, these fundraising methods classify all such tokens as an investment security. And with his background, it is quite likely that Securities and Exchange Commission (SEC) regulators will listen to what he has to say.

Top investors, too, have weighed in on Ripple’s status including cryptocurrency investor Tim Draper, who said he believes that “almost every token out there is a currency” based on the fact that their proceeds go to the support and development of the token themselves. That would place them outside the purview of organizations such as the SEC.

Should Ether and Ripple be classified as securities, the two cryptocurrencies — which are the second and third-largest cryptocurrencies by market capitalization at $61 billion and $32 billion, respectively — would be in serious trouble. The coins and their exchanges would be subjected to much greater scrutiny, even potentially becoming illegal for non-accredited American retail investors to trade.

Original story: https://tinyurl.com/yat265c3

by