Let’s Look at How the SEC’s Regulatory Tactics Have Affected Ethereum and the Crypto Market

By the end of 2017, it almost looked inevitable that Bitcoin and Ethereum would take over the world of digital finance— primarily because they offered consumers with novel offerings (such as dApps and smart contracts) that made international monetary transactions highly streamlined and hassle free.

Fast forward to the start of this year and the prices of almost all of the major altcoins have dropped by over 80% — with Ethereum tanking below $100 last December after scaling up to an ATH of $1.4k just 10 months earlier.

Even though over the course of the past few weeks a mini-recovery (of sorts) has ensued, the long term situation continues to look quite bleak for the industry as a whole.

In relation to the matter, Peter Du, the founder of Du Capital, recently spoke with a respected media outlet regarding the short/long term future of this burgeoning domain:

“Cryptocurrencies, which were once the new darling and dream of investors have now taken a backseat, given the current crypto blizzard. To be sure, maintaining hundreds of billions of dollars in valuations supported by unsecured coin issuance was unrealistic and in the long-term, unsustainable. Ethereum as an infrastructure blockchain that other coins hinged on, was a temporary beneficiary and grew in valuation as a result, but without having the equivalent growth in infrastructure, ecosystem and mass adoptable applications.“

Du then went on to elaborate that the unwarranted cracking down of ICOs by the US Securities and Exchange Commision had contributed to many firms selling off their digital holdings (so as to minimize their losses and procure more “stable” fiat assets). Not only that, Du also stated:

“Now that the United States Securities & Exchange Commission has issued stricter regulation on ICOs, the once skyrocketing valuations have come back down to Earth. Ethereum’s inability to scale comes at great cost, not just to its own project, but to token holders and other tokens that rely on it. We see this with other infrastructure coins too, such as EOS. In the medium-term, they risk marginalization, as new public and sector-specific blockchains up their ante.”

With that being said, he mentioned that the future was not entirely gloomy and moving forward, the digital finance community needs to learn from all that has transpired over the course of the past couple of years.

Final Take

Du believes that in order for the crypto ecosystem to thrive and enter the mainstream, investors need to change their mentality and stop caring about short-term gains. Instead, he believes the community at large should look towards

“solidifying building blocks in the long-term to make blockchain a formidable and reliable ecosystem.“

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