What happened
The crypto market continued its volatile ways this week, but this time the market broke in investors' favor. It was a crackdown from the U.S. Securities and Exchange Commission (SEC), bank troubles, and some legal rulings that pushed values higher.
According to data provided by S&P Global Market Intelligence, XRP (XRP -0.87%) was up 13.3% in the last seven days as of 10 a.m. ET, Solana (SOL -2.81%) had gained 6%, and Cardano (ADA -0.42%) was up 6.7%.
So what
The banking crisis continues in the U.S., which is pushing investors to alternative assets like cryptocurrencies. What investors are worried about in general are the security of assets at banks compared to the self-custody of assets on the blockchain, as well as the potential devaluation of the U.S. dollar. Regulators have thus far backstopped deposits, but have yet to bail out banks as they did during the financial crisis.
On the crypto regulation side, the news is more mixed. XRP creator Ripple has been in a battle with the SEC since 2020 when the agency filed a lawsuit alleging it sold an unregistered security. The token was up this week in the hope the company will win this lawsuit after the company submitted information regarding Binance's recent buyout of Voyager's assets to the judge. Binance's acquisition included the VGX token, which wasn't a registered security, and the judge threw out the SEC's objection because of the "vagueness" of the regulator's position. That could play into Ripple and XRP's favor if the judge in their case rules in the same way.
Meanwhile, cryptocurrency platform Coinbase revealed it had received what's called a Wells notice, which is a warning that the SEC has identified potential securities violations that could lead to a lawsuit. This continues a multiyear battle with the SEC that has left Coinbase's questions about what is and isn't a security unanswered. The company said it is happy to fight the SEC in court.
Ironically, the SEC's actions may lead to more clarity for those involved with building innovative products using the blockchain and cryptocurrencies. If the SEC loses its case with Coinbase, clearer rules may need to be made by regulators and lawmakers.
Solana and Cardano were both up this week thanks to the ongoing banking crisis and a move to leading cryptocurrencies, and they're both making upgrades that have taken shape this week. Solana announced that the Solana Saga mobile phone with wallet security built into the device will officially launch on April 13 and Cardano's upgrade to dynamic peer-to-peer networking went live on March 17. Both of these tokens are known as utility tokens, which means they allow for smart contracts that developers can use to build businesses on the blockchain.
Now what
This isn't the first time the crypto industry has faced regulatory questions, and it won't be the last. The SEC is going after the biggest names in the industry right now, and that's a fight they're not going to give up easily. For investors in crypto, that could be very good news.
What I think is encouraging is that Coinbase and Ripple have stood on principle and are forcing answers for the industry. And as Coinbase builds more products aimed at mass market adoption, it could benefit from regulatory clarity.
I think the regulatory action over the last few weeks is a reminder that cryptocurrencies could serve a valuable purpose in the future as people need digital, self-custody solutions for their money. Coinbase, XRP, Solana, and Cardano are building tools for that mass adoption of crypto, and while these are turbulent times, I think they do have a bright future.
