Coinbase's 20% Decline Leads Crypto Names Lower Following Report of SEC Probe

Bitcoin is lower by 3% on Tuesday, with ether and Solana's SOL down by about 7%.

AccessTimeIconJul 26, 2022 at 7:13 p.m. UTC
Updated Jul 26, 2022 at 7:44 p.m. UTC

Michael Bellusci is CoinDesk's crypto reporter focused on public companies and digital asset firms.

Crypto exchange Coinbase (COIN) is plunging on Tuesday alongside sharp declines for cryptocurrencies following a Monday night report that the SEC is investigating the company for allowing Americans to trade in tokens that should have been registered as securities.

“Coinbase was considered one of the better-run crypto companies that tried to obey the rules and work with the regulatory bodies,” Edward Moya, senior markets analyst at Oanda said in a note Tuesday. “The risk of tougher regulation has been a constant headache for crypto, and it seems that a couple of tough rulings could cripple a good portion of the cryptoverse," he added. "If some cryptos are deemed securities, that would make the life of so many brokerages so much harder."

While Coinbase is hardest hit, with a 20% drop late on Tuesday afternoon, related players like MicroStrategy (MSTR) and Marathon Digital (MARA) are also suffering sizable declines of roughly 11%.

Checking cryptocurrencies themselves, bitcoin (BTC) – possibly the only crypto the SEC may not deem a security – is outperforming with a 3% decline. Ether (ETH) and Solana's SOL (SOL) are off closer to 7%.

"While the digital asset industry was born and grew outside of any real scrutiny by the SEC, that appears to have changed," Tyler Gellasch, executive director of the Healthy Markets Association, told CoinDesk. "It’s an existential threat to crypto exchanges and brokers, because many of their current revenue streams are either likely dramatically reduced or outright prohibited in the securities world."

DISCLOSURE

Please note that our privacy policy, terms of use, cookies, and do not sell my personal information has been updated.

The leader in news and information on cryptocurrency, digital assets and the future of money, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups. As part of their compensation, certain CoinDesk employees, including editorial employees, may receive exposure to DCG equity in the form of stock appreciation rights, which vest over a multi-year period. CoinDesk journalists are not allowed to purchase stock outright in DCG.

CoinDesk - Unknown

Michael Bellusci is CoinDesk's crypto reporter focused on public companies and digital asset firms.

CoinDesk - Unknown

Michael Bellusci is CoinDesk's crypto reporter focused on public companies and digital asset firms.

Investing in the Future of the Digital Economy
October 18-19 | Spring Studio, NYC