- The Ripple decision sets a precedent for crypto regulation
- Bitcoin reaches 1-year high
- Binance is laying off more than 1,000, according to the report
SINGAPORE/WASHINGTON, July 14 (Reuters) – Bitcoin hovered near its highest so far this year on Friday after crypto investors took heart from a legal victory in which the cryptocurrency XRP was ruled not to be a 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 for a cryptocurrency company in a lawsuit filed by the US Securities and Exchange Commission. While the decision was case-specific, it sparked a wave of optimism among crypto investors that more cryptocurrencies may not be considered securities either.
Still, enthusiasm for some was 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 lead to the exchange losing more than a third of its employees, says the report, which quotes a person familiar with the matter.
Bitcoin hit its highest price since June 2022 earlier, hitting $31,818, before easing to trade around $30,935 at 1730 GMT on Friday.
The second-largest token ether had its best session since March on Thursday and XRP, which the US judge ruled could be legally sold 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 in the last 24 hours, it could be for the better.”
Justin d’Anethan, head of Asia business development at Keyrock, a Hong Kong-based digital asset maker, said the finding that XRP tokens sold on public crypto exchanges were not securities under the law “probably serves as a precedent “.
“Ripple stakeholders were waiting for some regulatory clarity. Yesterday, the court appears to have provided just that,” he said.
Following the decision, several major cryptocurrency exchanges, including Coinbase (COIN.O) and Bitstamp, resumed trading XRP on their platforms, after suspending trading of the token in 2021 due to the SEC’s lawsuit. Binance.US said on Friday that it had also enabled XRP trading on the exchange.
Coinbase, which was sued by the SEC last month for alleged violations of securities laws, saw its shares rise nearly 25% on Thursday as investors hoped the ruling in the Ripple case would bode well for Coinbase.
Cryptocurrencies have staged a gradual recovery so far this year, after prices fell sharply last year and a series of bankruptcies at major crypto firms, including crypto exchange FTX, left investors with heavy losses.
The collapse of FTX added momentum to global regulatory efforts to rein in the sector, particularly to protect small investors lured by quick returns.
China has almost banned crypto. US investigators probing FTX have accused founder Sam Bankman-Fried of multibillion-dollar fraud, to which he has pleaded not guilty.
Alex Mashinsky, the founder of bankrupt crypto lender Celsius, was charged with fraud for misleading customers and artificially inflating the value of the company’s token, according to a US indictment unsealed Thursday. He pleaded not guilty.
Meanwhile, Coinbase and larger rival Binance face lawsuits, which they dispute, from the SEC and, in Binance’s case, from other regulators as well.
A top SEC official said last month that the industry has “an ethos built around non-compliance”.
At Binance, the layoffs as reported by the Wall Street Journal are happening because a number of executives have recently left the company, including Chief Strategy Officer Patrick Hillmann. Hillmann confirmed on Twitter that he was leaving the stock exchange, citing personal reasons.
Still, crypto investors have received encouragement from the world’s biggest asset manager, BlackRock ( BLK.N ), which filed to launch a bitcoin exchange-traded fund last month. Earlier in July, exchange operator Cboe (CBOE.Z) updated its application for a similar fund to be run by asset manager Fidelity.
As a risk asset, cryptocurrencies can also profit from a weaker dollar.
“We had gone through this long period of just consistently negative news to make the room look pretty dirty,” said Chris Weston, head of research at Melbourne brokerage Pepperstone.
“For the first time in a while, there’s been consistently positive news coming out, and that means you’ve got momentum.”
Additional reporting by Vidya Ranganathan in Singapore; Editing by Simon Cameron-Moore and Alex Richardson
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Hannah Lang covers financial technology and cryptocurrency, including the businesses that drive the industry and the policy developments that govern the sector. Hannah previously worked at American Banker where she covered banking regulation and the Federal Reserve. She graduated from the University of Maryland, College Park and lives in Washington, DC.