The price of Ethereum has registered a five-percent drop in price over the past day – and the most likely reason is the rumored meeting where US regulators are scheduled to discuss the most appropriate way to classify the cryptocurrency.
Last week, The Wall Street Journal reported that officials from the Commodities Futures Trade Commission (CFTC) and the Securities and Exchange Commission (SEC) will convene to debate whether certain cryptocurrencies should be regulated as securities.
The meeting, which will purportedly take place today on May 7, has become a hot topic among the cryptocurrency community – especially because crypto-traders speculate it could have a serious impact on their investments.
One thing to keep in mind is that deeming Ethereum a security will have massive implications for many other blockchain-based tokens and cryptocurrency startups – especially those based on the ERC20 standard.
For one, exchange desks will have to register with the SEC or risk massive fines, Quartz explains. The publication further notes that dropping Ethereum from their trading platforms will also likely put a big dent in the price of the cryptocurrency.
Former CFTC chairman Gary Gensler previously hinted that unlike Bitcoin, Litecoin, and Bitcoin Cash, cryptocurrencies like Ethereum and Ripple share some characteristics with securities.
Ethereum co-founder Joseph Lubin subsequently expressed confidence that “the regulators that matter understand what Ethereum is” in an interview with The Street. He further added he is “extremely comfortable that [the cryptocurrency] is not a security” and never was one.
It is worth pointing out that, while a five-percent increase in price would have been a pretty significant development in any other industry, such swings are nothing uncommon in the cryptocurrency market. Indeed, at this stage it is fair to say that high volatility is the rule – and not the exception – in the world of crypto.